Corporate report

Evaluation of HMRC’s implementation of powers, obligations and safeguards introduced since 2012: commitment update

Updated 27 April 2023

Introduction

In a Written Ministerial Statement made on 22 July 2019, the then Financial Secretary to the Treasury, Rt Hon Jesse Norman MP, set out the steps HMRC was taking to build and maintain public trust in the tax system, including a programme of work on HMRC powers and taxpayer safeguards. As part of this work HMRC committed to an evaluation of the implementation of powers introduced since 2012 in relation to the powers and safeguards principles (see Annex A).

Following extensive engagement with stakeholders, including customers and their representatives, HMRC published its evaluation report on 4 February 2021. The evaluation found that while HMRC had implemented powers consistently, tailoring the approach to ensure decisions are proportionate to individual circumstances, it was important to consistently demonstrate to customers that HMRC has listened to them and considered their evidence and circumstances, in line with the service and standards of behaviour set out in the HMRC Charter. The evaluation also highlighted situations where HMRC could do more to help customers understand and comply with their obligations or take more account of customers circumstances when deciding whether and how to exercise powers.

To address the areas identified within the evaluation, HMRC made 21 commitments to help build and maintain public trust in the tax system. These commitments cover a wide range of work with varying timescales and are focused on continual improvement.

The commitments broadly aligned with 3 themes:

• helping raise awareness of obligations, especially for harder to reach audiences
• ensuring HMRC continue to use powers professionally and with respect during compliance enquiries, building trust in HMRC’s decisions
• reassuring taxpayers HMRC are being consistent and proportionate when taxpayers get it wrong, including when considering penalties and providing time to pay arrangements

HMRC continues to recognise the need for an appropriate balance between the powers granted by Parliament and customer safeguards. The commitments made reflect HMRC’s determination to achieve and consistently maintain the highest standards of professionalism, while implementing the powers granted by Parliament to ensure that customers meet their obligations. HMRC remains committed to ensuring powers are exercised in a proportionate way that maintains and builds public trust.

Considerable work has been undertaken to deliver on the commitments made in this evaluation. HMRC has provided regular updates to, and worked collaboratively with, the Powers and Customer Safeguards Forum (formerly the HMRC Powers and Customer Safeguards implementation evaluation set up under the evaluation) to ensure that external oversight and challenge on delivery of the commitments has been maintained. HMRC is extremely grateful for the continued collaborative input of all those who have supported this programme of work.

This report sets out an overview of the steps HMRC has taken to meet the commitments. A summary of the commitments and work undertaken is provided in the next section. Further detail on commitment delivery is contained in the following chapters, which link back to the findings and structure of the evaluation. While each commitment has required distinct action many are closely linked; the text explains the approach taken.

List of commitments

Commitment 1: HMRC will consider what further work on powers and safeguards should be taken forward as part of the review of the tax administration framework that was announced in July 2020.

This is a long-term commitment, delivery of which is being taken forward under the Tax Administration Framework Review (TAFR), a 10-year programme of work which commenced in 2020. The first TAFR call for evidence closed on 13 July 2021 and the summary of responses was published on 30 November 2021.

HMRC has progressed conversations with external stakeholders during 2022 using the insight and evidence from the initial call for evidence.

Commitment 2: HMRC will continue to use data to target communications at the right audiences at the right time to help promote compliance and prevent non-compliance, including maximising the benefits of the Making Tax Digital programme.

The use of data to target communications at the right audience is embedded in HMRC’s internal processes, with communications activity reviewed via a monthly performance dashboard. Communications are evaluated, and insights captured with lessons learned built into future communications.

Commitment 3: HMRC will continue to deepen partnerships with voluntary and community organisations to help raise awareness of tax obligations amongst, and build trust with, harder to reach taxpayer groups, complementing existing partnerships with industry and agent representative organisations. This includes helping ensure the digitally excluded and those requiring digital assistance are aware of new obligations that affect them and can access the guidance they need.

HMRC’s grant funding with the voluntary and community sector (VCS) has been extended to a 3-year scheme, with support for research to prepare customers and enable VCS organisations to help deliver the government’s digital agenda.

A roundtable was held with stakeholders to help understand the challenges, which fed into the new Digital Inclusion Strategy, with governance provided by the Support for Customers Steering Group.

Commitment 4: HMRC will continue to explore opportunities for new and innovative communication approaches to help ensure taxpayers are aware of and understand their obligations, including harder to reach groups.

The continued exploration of new and innovative communications to help taxpayers is embedded in HMRC internal processes.

Training is provided to HMRC communications professionals and monthly reporting in place, which is evaluated, with actionable insights captured and used to learn lessons and inform future communications. Communications training is also delivered to policy professionals through HMRC’s Tax Policy School training programme.

Commitment 5: HMRC will continue to improve users’ experience as they use guidance, including by providing decision-based guidance to help people find the answers they need and by publishing guidance in alternative formats, including online videos.

An established programme for continual guidance improvement is embedded into HMRC internal processes with defined success measures and progress reported to the Guidance Strategy Forum.

HMRC continue to improve users’ experience of guidance by providing decision-based guidance to help people find the answers they need; and by publishing guidance in alternative formats, including online videos.

Commitment 6: In order to make guidance as useful as possible, HMRC will work with its new Guidance Forum: to inform strategic priorities for guidance, including further opportunities to use interactive guidance; to consolidate the practice of collaboration with experts on guidance; and to explore opportunities to strengthen awareness of the guidance feedback process.

The Guidance Strategy Forum convenes every quarter. Details of purpose, membership, terms of reference and minutes are published on GOV.UK.

HMRC has introduced interactive, decision-based guidance as well as guidance in alternative formats, such as online videos and webchat, which can help customers navigate the tax system more easily, improve user experience and make compliance simpler.

Commitment 7: HMRC will continue to raise awareness of the Corporate Criminal Offence (CCO), particularly amongst hard-to-reach and higher risk groups.

Considerable awareness activity has been undertaken including webinars, podcasts, publications and presentations. Continuing to raise awareness of CCO remains part of HMRC’s fraud prevention and customer support activity.

Commitment 8: HMRC will review how to best clarify the scope of multinational enterprises’ obligations, with respect to publishing their tax strategies.

Following consideration of the issues raised, including wider engagement through the review of tax administration for large businesses, HMRC will consider how further work can be taken forward and provide any updates at future fiscal events.

Commitment 9: HMRC will continue to evaluate and improve compliance communications; and will strengthen assurance processes around One to Many (OTM) activity, inviting external input and feedback, to help ensure they consistently meet the high standards that the public expect.

OTM compliance communications were improved following an internal evaluation. As a result of evaluation recommendations, a strong assurance process has been embedded, supported by internal governance and regular meetings of the OTM Compliance Advisory Board (an HMRC forum with external members from representative bodies).

Ongoing activity to improve compliance communications continues as part of HMRC’s commitment to continuous improvement.

Commitment 10: HMRC will continue to raise awareness of the HMRC Charter, using quarterly reviews and the HMRC Charter annual report to monitor progress and identify and act on areas for improvement.

HMRC continues to undertake activity to improve customer experience and embed the service and standards of the HMRC Charter into its service and processes. Progress is monitored quarterly by the Customer Experience Committee and reported annually in the HMRC Charter annual report.

Commitment 11: HMRC’s ongoing work to continuously improve technical tax and core compliance capabilities will focus on ensuring that HMRC’s officers have the resources, skills and capability to deliver the standards set out in the Charter.

This is a long-term commitment to ensure HMRC continues to develop and improve tax technical and core compliance capabilities, improving HMRC’s overall learning offer and capability to deliver the service and standard of behaviour set out in the HMRC Charter.

Enhanced training for new recruits focusing on HMRC’s Compliance Professional Standards to meet the needs of its customers, has been developed and delivered by a new Central Training Unit since 2021. HMRC is building on this by delivering improvements to its continuing professional development (CPD) offer for more experienced tax and compliance professionals.

Commitment 12: HMRC’s Compliance Extra Support team will continue to maintain and build processes that help ensure those who need extra help are identified and provided with appropriate support during enquiries.

HMRC’s Compliance Extra Support service has been expanded to cover compliance checks. This provides expert advice and support to caseworkers managing a compliance check, to help customers whose health and/or personal circumstances mean they find the process stressful or more difficult to understand.

HMRC continues to build strong partnerships with representative bodies including VCS organisations.

Commitment 13: HMRC will continue to engage with voluntary and community sector organisations to provide support for individuals who need extra help.

As highlighted under commitment 3, engagement with VCS organisations to support those needing extra support is fully established, with grant funding agreed until 2024 and relevant governance in place. HMRC continues to work to identify those that need extra help and ensure they are provided with appropriate support.

In October 2022, Samaritans and HMRC launched an 18-month project to improve the support offered by HMRC to its customers.

Commitment 14: HMRC will explore how improving awareness around internal governance processes could promote public trust in decisions to apply the General Anti-Abuse Rule (GAAR), Accelerated Payment Notices (APN), Follower Notices (FNs) and the powers underpinning the Diverted Profits Tax (DPT).

HMRC explored how to improve awareness around internal governance processes and promote public trust in decisions to apply the GAAR, APNs, FNs, and the powers underpinning the DPT. As a result, a new page on GOV.UK was created to bring together information on internal governance process on resolving tax disputes in one place.

Commitment 15: HMRC will seek views from taxpayers, agents and their representatives on opportunities to improve awareness and uptake of the statutory review process.

Considerable awareness activity on the statutory review process has been undertaken including the publication of 3 new explanatory YouTube videos. HMRC has updated call handler guidance and related guidance on GOV.UK. A further programme of work is being undertaken to deliver improvements to HMRC decision notices and factsheets.

In addition, a new internal process is in place to review requests which now go directly to HMRC Solicitors team.

Commitment 16: HMRC will review and update guidance to clarify the range of factors that may contribute to reasonable excuse, taking account of an individual’s personal circumstances. HMRC will support this work by strengthening training products, including case studies, to help build capability, confidence, and consistency of approach where HMRC’s officers are considering the application of reasonable excuse.

Updated guidance on reasonable excuse has been published on GOV.UK. Work continues to build capability, confidence and consistency through CPD (see also commitment 11) in line with the service and standards set out in HMRC’s Charter and Compliance Professional Standards.

Commitment 17: HMRC will consult with agents and their representatives to update guidance on FNs, APNs and the Requirement to Correct (RTC) by summer 2021.

Updated guidance on FNs and APNs has been published. New guidance on RTC has also been published.

Commitment 18: HMRC will continue to explore opportunities to help raise taxpayers’ awareness of their rights as well as their obligations when paying tax debt through a time to pay arrangement.

Improved guidance to raise customer awareness of rights and obligations when paying debt through a time to pay arrangement has been published.

Commitment 19: HMRC will consult with agents and their representatives to consider guidance updates on coding out of debt (through the Pay As You Earn (PAYE) system) and Simple Assessment by summer 2021.

Updated guidance on coding out of debt and Simple Assessment has been published.

Commitment 20: HMRC will consider how powers introduced since 2012 to recoup debt, especially the power to code out debt, could be used more widely to support those in financial hardship.

Following consideration of how powers to code out debt could be used more widely to support customers, activity to support customers with coding out of debt was trailed with a limited target population.

The findings from this ‘test and learn’ were evaluated and improved before wider rollout. HMRC anticipates that coding out of debt will be offered proactively to support those in financial hardship as an alternate and cost-effective way to meet their liability, though HMRC understands this will not be suitable in all scenarios.

Commitment 21: HMRC will host a roundtable meeting to discuss opportunities to improve taxpayers’ experience where they correct their tax through the Worldwide Disclosure Facility in spring 2021.

Two roundtable meetings took place where operational improvements were recommended and have since been delivered by HMRC. Work continues with representatives of the Offshore Forum on future improvements.

Engaging with external stakeholders

HMRC’s partnership with customers, agents and their representatives to take forward this evaluation was underpinned by an external forum consisting of customer representative organisations and HMRC.

Following the publication of the evaluation report, the forum continued to meet, supporting and holding HMRC to account on the implementation and delivery of the commitments made in that report.

Terms of reference for the Powers and Customers Safeguards Forum can be found at Annex B.

HMRC is extremely grateful to external members for their continued support and collaboration in delivering the commitments.

Membership of the Powers and Customer Safeguards Forum

The forum members are:

• Association of Accounting Technicians (AAT)
• Association of Chartered Certified Accountants (ACCA)
• Association of Taxation Technicians (ATT)
• Citizens Advice
• Chartered Institute of Payroll Professionals (CIPP)
• Chartered Institute of Taxation (CIOT)
• Federation of Small Business (FSB)
• HM Revenue and Customs (HMRC)
• Institute of Chartered Accountants in England and Wales (ICAEW) Tax Faculty
• Institute of Chartered Accountants in Ireland (ICAI)
• Institute of Chartered Accountants of Scotland (ICAS)
• Institute of Financial Accountants (IFA)
• The Law Society of England and Wales (The Law Society)
• Law Society of Scotland
• Low Incomes Tax Reform Group (LITRG)
• Office of Tax Simplification (OTS)
• Tax Aid (TA)
• Tax Investigation Practitioners Group (TIPG)

The forum complements other arrangements through which HMRC engages the public and their representatives, including the Compliance Reform Forum and the Representative Body Steering Group.

Building a modern, trusted tax system

The Powers and Safeguard evaluation reinforced the government’s commitment to create a tax system fit for the challenges and opportunities of the 21st century. Critical to this is a trusted, modern tax administration which will provide a better experience for individuals and businesses, enable opportunities to further reduce the tax gap, and help build greater resilience and responsiveness to future crises. The government set out its future ambition in its strategy paper Building a trusted, modern tax administration system published in July 2020.

As part of this strategy, the government is exploring options to reform the tax administration framework: the core legislation, process and guidance that set out and underpin the obligations for HMRC and taxpayers and help establish what tax is due and how it is paid. This review of the tax administration framework will provide further opportunities to consider the powers that enable HMRC to administer the tax system, customer obligations and the safeguards and protections afforded to taxpayers. It will also look at how new powers can be considered within the context of modernisation of the tax system.

TAFR is part of the government’s 10-year vision for the tax system, and as such is a longer-term programme of work, the scope of which goes beyond the initial work completed under the powers and safeguards evaluation. In the evaluation, HMRC agreed to consider what further work on powers and safeguards should be taken forward as part of the review of the tax administration framework announced in July 2020 (commitment 1).

In March 2021 the government published a call for evidence on the tax administration framework which included questions on the existing legislative provisions relating to powers, sanctions, and safeguards. As part of the customer engagement HMRC hosted over 50 events with stakeholders and received 50 written responses to the call for evidence. Members of the Powers and Safeguards Forum attended the stakeholder events and either contributed to the call for evidence with written responses or organised for their members to do so. HMRC is grateful for these contributions.

In the call for evidence summary of responses the government recognised that many of the issues respondents raised in relation to powers and safeguards had also been raised in response to the evaluation of HMRC’s implementation of powers, obligations and safeguards introduced since 2021.

The government outlined that HMRC will continue to take forward the commitments made in the evaluation report and noted stakeholders’ views in other areas, where HMRC is taking forward work. The government noted respondent’s views that tax administration reform should aim to give customers greater certainty more quickly, provide opportunities to challenge HMRC’s decisions more easily and make the sanctions regime simpler.

The government also acknowledged views on how the framework could be reformed to support better use of information and data in tax administration. Additionally, the government recognised the call for reforms to legislation and HMRC’s operational approach to ensure fair and constant treatment of customers, and to improve trust.

HMRC is progressing work on consideration of the issues raised in the call for evidence responses with the aim of carrying out further external engagement at Tax Administration and Maintenance Day 2023 to gather views on opportunities to modernise information and data powers, including the first and third party powers at Sch 36 FA 2008 and Sch 23 FA 2011 respectively.

Raising awareness for rights and obligations

The evaluation highlighted that most customers want to get their tax right first time, and that HMRC want to help them do so by promoting compliance and preventing non-compliance in line with HMRC’s strategy.

Whilst HMRC aims to design compliance into systems and processes and use data to spot mistakes and personalise online services, the evaluation set out that more should be done to deepen HMRC’s existing partnerships with VCS organisations to help engage harder to reach audiences.

The evaluation also found that HMRC should do more with its information campaigns and guidance to help ensure compliance first time by developing a common understanding of how the tax system works, building trust and ensuring everyone knows what they need to do.

Understanding and engaging relevant audiences

HMRC knows that customers need to understand their obligations to get their tax right first time. Most customers want to do that and HMRC want to help them to do so. The evaluation highlighted that, while this approach works well for most customers, HMRC could continue to improve so that more people receive the most helpful message at the right time.

Building awareness of new measures through timely and clear communications builds trust and protects HMRC reputation. Delivering clear, accessible and transparent communications with the target audience, helps to promote compliance and reduce customer confusion. External respondents highlighted that not everyone is aware of new obligations that might impact them and the challenges of raising awareness amongst harder-to-reach audiences.

HMRC therefore agreed to continue:

• using data to target communications at the right audiences at the right time to help promote compliance and prevent non-compliance, including maximising the benefits of the Making Tax Digital programme (commitment 2)

• deepening partnerships with VCS organisations to help raise awareness of tax obligations amongst, and build trust with, harder to reach customer groups, complementing existing partnerships with industry and agent representative organisations. This includes helping ensure the digitally excluded and those requiring digital assistance are aware of new obligations that affect them and can access the guidance they need (commitment 3)

• exploring opportunities for new and innovative communications approaches to help ensure that customers, including harder to reach groups, understand their obligations (commitment 4)

Targeting communications to the right audiences

HMRC has continued to use data to target communications at the right audiences, providing customers with the support needed to meet their obligations. More resources have been allocated to make the most of data HMRC already holds, to target customers with information most relevant to them and send targeted messages in a tone that resonates.

Examples of targeted messages using data HMRC already holds include:

• targeting emails to those who could potentially benefit from deferring their VAT as part of the VAT Deferral New Payment Scheme, encouraging customers to use the initiative if they needed support during the coronavirus (COVID-19) pandemic

• contacting Making Tax Digital VAT registered customers operating below the VAT threshold and encouraging them to join and familiarise themselves with the Making Tax Digital system ahead of April 2022, when it became a requirement

• reminding customers to set up new direct debits for VAT payments to HMRC following the introduction of the new Enterprise Tax Management Platform

• using statistics on the number of Child Trust Funds that have matured but remain unclaimed to run a campaign encouraging young adults to access their funds whilst also prompting their parents to remind them ^{[footnote 1]}

• raising awareness of the Health and Social Care Levy by emailing 1.4 million employers (who in turn employ around 22.7 million employees) reminding them of the need to prepare their own payroll systems and prepare their employees. The data was also used to inform employers when the policy was revoked ^{[footnote 2]}

HMRC has worked closely with external stakeholders to test the communications approach, messaging, and guidance, to make sure that communications activity and products are effective and impactful for customers. For harder-to-reach customers, HMRC has partnered with other organisations with existing communication channels.

The targeting of communications to relevant customer populations continues to improve as better sources of data become available through internal HMRC transformation. For individual taxpayers and small businesses, this means HMRC will make it easy for customers to get things right first time and find the support they need through an improved online service. Accessed through mobile and desktop devices, customers will be able to see most of their tax affairs via one secure account and complete everyday tasks – such as viewing the tax they pay or updating contact details – with the click of a button. Improvements to customer service as HMRC moves to a fully integrated digital tax administration system will result in HMRC being able to communicate in a more targeted and timely way with customers.

HMRC continues to use data to target communications at the right audiences at the right time to help promote compliance and prevent non-compliance, including maximising the benefits of the Making Tax Digital programme. HMRC reviews and evaluates communication campaigns, and continually reviews and adapts plans, evolving messages to customers so that they resonate and carefully explain what HMRC requires of them. This includes messaging on HMRC’s strategy and timelines for ongoing transformation where appropriate. HMRC keeps pace with external developments and listens to how messages have landed with customers and stakeholders, adapting as needed.

Operationally, HMRC continues to focus on quality customer communications in all media, including letters, email, and in guidance used by its contact centres. Attention is paid to language, format and tone. This ensures frontline colleagues are equipped to support customers’ understanding of their tax obligations and benefits, and to help them pay their tax on time and with ease.

The standard process for tax communications and campaign planning uses the Government Communications Service (GCS) OASIS planning process which involves gathering all available insight on target audiences and their opinions to inform plans and activities. The process examines what was done during previous campaigns and how successful they have been, to learn lessons and improve.

HMRC recognises that communications are a means of raising awareness of new obligations or explaining customer rights. Ensuring the right message gets to the right audience at the right time is at the heart of HMRC communications. It is acknowledged that it can be particularly challenging to raise awareness amongst harder-to-reach audiences, so HMRC continue to work with voluntary and community organisations to raise awareness of tax obligations with those harder-to-reach customers.

Deepening partnerships with voluntary and community organisations

HMRC engages with VCS organisations through external forums, including the Additional Needs Working Group and Individuals Stakeholder Forum. Through these forums, HMRC consults on key issues that impact customers, provides updates, and gathers views and insight from the VCS on new policy and process changes. 

HMRC runs the Tax Credits consultation forum, an active group of welfare support organisations working with the group and the Department of Work and Pensions to smooth the transition of customers as they move from Tax Credits to Universal Credit.

HMRC also supports the maintenance of LITRG’s revenuebenefits website, a resource aimed at advisers which provides detailed information, legislation and resources on tax credits, child benefit, national minimum wages and the transition to Universal Credit, as well as tax-free childcare.

HMRC staff undertake secondments to provide additional outreach and guidance for this more vulnerable customer group. More detail on HMRC’s work with the VCS can be found in chapter 7.

Users’ experience of guidance

The evaluation highlighted the role of HMRC’s published guidance as being a key source of information about customers’ rights and obligations.

The OTS called for HMRC to make it easier for customers to find the guidance they need and HMRC agreed to continue to improve users’ experience of guidance, such as, providing decision-based guidance to help people find the answers they need; and by publishing guidance in alternative formats, including online videos (commitment 5).

As expressed in the evaluation HMRC welcomed feedback to help ensure published guidance is as useful and up to date as possible, and to help prioritise updates. HMRC introduced interactive, decision-based guidance as well as guidance in alternative formats, such as online videos and webchat, which can help customers navigate the tax system more easily, improve user experience and make compliance simpler.

HMRC also committed to work with its new Guidance Strategy Forum to inform strategic priorities for guidance, including further opportunities to use interactive guidance; to consolidate collaboration with experts on guidance; and to explore opportunities to strengthen awareness of the guidance feedback process (commitment 6).

HMRC continues to build its commitments to deliver first class guidance for customers, using the evaluation findings to help inform the guidance strategy. Delivering excellent guidance requires collaboration with internal and external stakeholders. HMRC has developed a detailed plan in response to the OTS recommendations, in line with the powers and safeguards commitments.

Key actions undertaken include:

• appointment of a Strategic Head of Guidance, whose role is to ensure HMRC has a coherent, effective and efficient strategy to deliver the guidance used by colleagues and customers

• investment in new technology enabling delivery of interactive guidance. This style of guidance has received positive customer feedback, as it helps direct customers to an answer based on their individual circumstances. HMRC has increased its capacity and capability to build step-by-step interactive guidance and delivered 16 products used by around 1.4 million customers with an average user satisfaction of 82%. These products are:

  • check if you need to pay back a Self-employment Income Support Scheme grant

  • check if you can get help from HMRC if you need extra support

  • check if you can set up a payment arrangement for Self Assessment

  • check if you need to declare goods you bring into or take out of the UK

  • check if you are at risk of tax avoidance

  • check if you can claim super-deduction or special rate first year capital allowance

  • starter checklist for PAYE

  • Self Assessment ready reckoner

  • get help understanding your tax code

  • check your tax residence status

  • check if you need to tell HMRC about additional income

  • check if you can delay customs payments and declarations

  • importing from and re exporting union goods to the EU Importing from and re-exporting union goods to the EU

  • check if you need to pay a tariff on goods brought into Northern Ireland from Great Britain

  • HMRC’s Service Dashboard

  • check when you can expect a reply from HMRC

• creation of a dashboard for GOV.UK, providing vital information on how many people use GOV.UK pages and whether they find them useful. HMRC reviews customer feedback comments to improve GOV.UK service. Having the performance metrics has enabled HMRC to see the impact of, and make adjustments to, significant guidance changes. As an example, the Self-Employment Income Support Scheme (SEISS) guidance was designed and launched rapidly to support those whose self-employment activities had been adversely affected by COVID-19. Close monitoring of customer feedback was critical, and iterations were made daily on the back of customer feedback, resulting in user satisfaction as high as 90%

• creation of a guidance roadmap, highlighting the areas customers tell HMRC they struggle with and addressing them by investing additional resources.

• development of measures of success on GOV.UK guidance, using user satisfaction and failure demand data. HMRC also explored how upstream compliance benefits are measured when guidance is improved

• creation of a Guidance Strategy Forum to seek views from a wide range of external representatives

• improved feedback routes into HMRC technical manuals to ensure customers can feedback on any issues and allow guidance to be quickly improved to aid customers understanding. In 2021/2022 HMRC received 3,068 items of feedback and consequently made 1,626 improvements to its manuals. HMRC has also made 250 changes to interactive guidance because of customer insight

• agreement of a new guidance model with HMRC webinars, forums, and Twitter teams to strengthen quality assurance models and use insight to improve guidance such as Tax Agent Toolkits

• meeting the OTS monthly, sharing progress, and seeking their input to help shape plans. The OTS published a review of HMRC Guidance for taxpayers in October 2018. The original report outlined 12 recommendations. The OTS Guidance Review update paper, published in April 2021, recognised that “considerable progress has been made” including HMRC committing increased resource to their guidance team; making clear progress in implementing the new guidance model envisaged in the OTS’s Guidance Report; making increased use of external feedback to improve guidance; and collaborating with the Guidance Strategy Forum.

Having dedicated resources to improve guidance on GOV.UK has enabled HMRC to enhance the customer experience and reduce the need for customers to make repeated contact. HMRC will continue to work to improve guidance through its established programme for continual guidance improvement and agreed success measures.

HMRC continues to work with its new Guidance Strategy Forum which was set up in response to the OTS’s call for greater collaboration between HMRC and external tax specialists. Chaired by HMRC’s first Strategic Head of Guidance, membership consists of over 30 external representative bodies including ABAB, CIOT, LITRG, ICAEW.

Feedback from Administrative Burdens Advisory Board (ABAB) and OTS is that this forum has been instrumental in building trust and support amongst the wider industry as HMRC delivers its ambitious programme of guidance improvements. Instead of focussing on the challenges of specific tax regimes, the purpose of the forum is explicitly to seek and share ideas about HMRC’s high-level guidance approach.

Stakeholder input has been sought in areas such as: 

• the types of guidance HMRC produces 
• HMRC’s publication channels 
• how the department acts on feedback received
• customer satisfaction and other performance data 
• the challenges in making HMRC’s online guidance accessible, navigable, and searchable

The regular pattern of meetings ensured an open channel of communication and continuous collaboration to develop HMRC’s guidance strategy, utilising the forum members’ experience and knowledge to review and improve guidance. The input and ideas forum members have shared have helped shape HMRC’s strategy around the following areas:

• consideration of HMRC’s approach to mainstream, specialist, and technical content on GOV.UK and how customers navigate between these   

• improving the way manuals are written; with support and training being provided to HMRC’s manuals community

• agreeing an internal service level agreement with manual owners to respond to feedback within set turnaround times from April 2022: 80% within 15 working days and 95% within 40 working days

• ensuring reliance on guidance was included as part of the TAFR and taking forward short-term improvement ideas, including working with the Tax Law Review Committee and CIOT to update HMRC’s current reliance statement and make it clearer when customers can rely on published guidance, HMRC also wants to signpost more effectively to the updated statement, which is due to be published by summer 2023.

• seeking insight from forum members when considering removing operational content from HMRC manuals and on where GOV.UK guidance needs strengthening or improving

• using insight from communication channels across HMRC, such as Twitter and customer online forums; to identify opportunities for improving guidance  

• reconsidering the way manuals are written to make them more accessible to external users and how they interact with GOV.UK guidance

• introducing a programme of education and support for manual editors and writers

• collaborating with Government Digital Service to ensure HMRC get sight of all feedback received to enable HMRC to act upon it quickly

Awareness of specific obligations and powers

During the evaluation engagement HMRC discussed in detail some specific legal reforms with external members of the Powers and Safeguards Forum. Some stakeholders suggested that there was scope to improve awareness of the Corporate Criminal Offence (CCO) through agent and trade representative bodies, as well as in direct discussions with customers.

Additionally, HMRC received positive feedback with respect to the implementation of the measure and support given to business customers on the publication of their tax strategies. However, some stakeholders suggested that guidance on the obligation on multinational enterprises to publish their tax strategies could be further clarified to help identify customers within scope, and their compliance obligations.

HMRC therefore agreed to:

• continue to raise awareness of the CCO, particularly amongst hard-to-reach and higher risk groups (commitment 7)

• review how to best clarify the scope of multinational enterprises’ obligations with respect to publishing their tax strategies (commitment 8)

The CCO is designed to drive change in corporate behaviour, holding relevant bodies responsible for the activities of their representatives where appropriate and creating a criminal offence for those who fail to prevent the criminal facilitation of tax evasion by their representative.

The evaluation highlighted opportunities to maintain and build awareness of the CCO through agent updates, employer bulletins, webinars and undertaking more intensive engagement, particularly with hard to reach and higher-risk groups.

In meeting this commitment HMRC has delivered a wide range of well received awareness activities including:

• delivering over a dozen webinars in partnership with accountancy and law firms, such as EY, Deloitte, Mazars, BDO, Linklaters, Mischon de Reya, Smith and Williamson, PSTAX and Grant Thornton

• delivering podcasts, including an episode on The new corporate criminal offence of failure to prevent tax evasion with the law firm RPC as part of their ‘Taxing Matters’ series (January 2021)

• publishing written articles in Tax Journal (March 2021), Tax Adviser (October 2020) and Employer Bulletin (October 2020)

• presentations at a number of forums including Large Business Counter-Fraud Forums, Banking, Insurance, Construction, Asset Management, Oil and Gas Forum, Business Tax Forum, HMRC Compliance Review Forum, HMRC Fraud Forum ^{[footnote 3]} and the Anti Money Laundering Practitioners Forum

• delivering accredited training sessions for Association of Certified Anti-Money Laundering Specialists (ACAMS)

Our approach to CCO is seen as an exemplar model and has led to the launch of a new Tax Crime Alliance with the accountancy and legal sectors, working in partnership specifically to tackle tax crime risks.

HMRC continues to promote awareness of CCO, with access for businesses to guidance and support on CCO continuing as part of HMRC’s ongoing fraud prevention and customer support activity.

The obligation on multinational enterprises to publish their tax strategy was intended to help drive broader behavioural change by altering corporate culture on tax transparency and placing a greater onus on businesses to expose their strategies to the public and ensure there is sufficient board oversight. The publication of tax strategies was partly borne out of an increased appetite amongst the public for greater levels of transparency in respect of large businesses’ tax affairs.

Following the powers and safeguards evaluation and the review of tax administration for large businesses HMRC has been considering options to move forward with this commitment. HMRC will consider how further work can be taken forward and provide any updates at future fiscal events.

Compliance communications

HMRC recognises that customers need to understand their obligations to get their tax right first time and want to help them to do that. At the time the evaluation was published HMRC had updated over 100 key compliance products (including standardised letters and factsheets) to make them clearer and easier to understand – by mid 2022 the number of products reviewed was over 1,000. In addition, these letters are more tailored to the needs of individual customers, including those that may need extra help.

The evaluation highlighted that HMRC should do more to ensure more people received the most helpful messages at the right time. HMRC therefore committed to continuing to evaluate and improve compliance communications; and will strengthen assurance processes around a OTM approach (where HMRC sends one standard message to many customers – the aim is to influence customers’ behaviour, so they are more likely to comply with their tax obligations), inviting external input and feedback, to help ensure they consistently meet the high standards that the public expect (commitment 9).

HMRC has evaluated and improved compliance communications and has strengthened assurance around OTM activity. This includes the creation and embedding of the OTM Compliance Advisory Board (OCAB), a sub forum of the Compliance Reform Forum.

The OCAB is made up of members from organisations covering both customers represented by agents and those without agents, to provide external input on planned activity. OCAB members help HMRC better understand impacts on customers and provide insight into the best ways to progress large-scale compliance interventions. HMRC works with OCAB for advice on specific project approaches and customer communications. OCAB members also advise and help HMRC communicate with harder to reach or more specialised audiences. 

A forward look of OTM activity is shared with OCAB on a quarterly basis, informing members of planned activity, equipping them to support their clients, manage volumes and understand HMRC’s ambitions through the OTM activity programme. A new internal governance has been introduced to assure this activity, which includes an internal Design Community consisting of experts and specialists from across HMRC, to support the design of the activity and a new internal governing body, the OTM Assurance Group, responsible for ensuring OTM activity is properly designed and impacted.

A new evaluation process has been introduced to ensure best practice and lessons learned are captured and shared across HMRC. A database has been created to capture data from all compliance based OTM approaches from design stage through to evaluation and is used to review how HMRC is deploying this compliance tool. This data helps to inform whether a project is proving successful and which areas would benefit from further or alternative awareness or educational activity as well as helping HMRC to consider the best timing for communications activity. HMRC provides regular feedback to OCAB and the OTM Assurance Group.

A baseline survey of OCAB views taken in September 2021 indicated there was room for improvement regarding the clarity of the messaging, the tone of letters, and ensuring customers had sufficient support to respond. Follow up surveys of OCAB views in May and December 2022 indicated that significant improvements had been made in all these areas.

HMRC continues to make improvements to OTM communications, particularly improving the timing of the activity and making sure customers can access the help they need. Further planned improvements include improving internal guidance and support products, and increased collaboration between project teams and OCAB on the content of HMRC letters and the wider design and delivery of projects. HMRC is also focusing on increasing transparency and building public trust.

Planned actions in this area include:

• ensuring OTM activities are consistently clear, accessible, and even-handed in approach

• providing greater clarity about penalties linked to ‘prompted’ and ‘unprompted’ disclosure and exploring where reform opportunities lie

• publishing a regular public update on GOV.UK to show the compliance areas HMRC is pursuing through OTM activity

• proactively providing briefing information on upcoming activity, through stakeholder groups, targeted social/digital and relevant trade media outlets, to reinforce and support OTM compliance messaging

Use of powers in compliance enquires

Tax enquiries are an important element of HMRC’s compliance work. In the evaluation HMRC recognised that compliance work, including using powers to make compliance checks, can be difficult and stressful for customers.

HMRC emphasises its commitment to treating customers fairly, professionally and with respect, and to working with them as quickly and effectively as possible to bring enquiries to an agreed conclusion, and continues to embed these commitments through the updated HMRC Charter in order to build further public trust in the tax system.

Meeting the professional standards of customer service that the public expect

The HMRC Charter sets out the standards of service and behaviour that customers can expect when dealing with HMRC.

While the evaluation concluded that HMRC generally meets these standards, it also outlined that more can be done to reassure customers their personal circumstances have been considered when they do not feel they should be subject to HMRC’s powers. Action has been and continues to be taken across HMRC to help ensure that every single customer is treated with professionalism and respect.

Alongside the HMRC Charter customers are encouraged to provide feedback about their experiences and if they do not feel their experience meets the expectations of the Charter, to submit a complaint. HMRC continues to work with the Charter Stakeholder Group, formed during the Charter consultation and attended by tax community representatives ^{[footnote 4]}. The Group assists HMRC in monitoring performance against the Charter and provide regular feedback.

In the evaluation HMRC committed to continue to raise awareness of the Charter, using quarterly reviews and the Charter annual report to monitor progress and identify and act on areas for improvement (commitment 10), and continue to improve HMRC’s technical and core compliance capabilities (commitment 11). At the time of the evaluation HMRC had published the Charter and was continuing to develop the capability of compliance officers.

HMRC continues to embed the Charter standards and use quarterly reviews by the Customer Experience Committee (CEC) and the Charter annual report to monitor progress and identify and act on areas for improvement.

HMRC’s CEC is a sub-committee of the HMRC Board and is attended by external customer experience experts as well as HMRC’s Independent Adjudicator. The CEC supports, challenges and guides HMRC on its customer experience work through formal quarterly meetings and informal support sessions on specific topics when required. It is responsible for reviewing HMRC’s performance against the Charter on a quarterly basis and the CEC publishes its findings annually in the Charter annual report.

During 2020 to 2021 the CEC advised on customer experience matters across HMRC’s business, for example, in relation to HMRC’s COVID-19 response, investment planning and the development of Compliance Professional Standards. Since publication of the new HMRC Charter, the CEC committee has supported HMRC to raise the visibility of the Charter, increase measurement of HMRC’s performance against the Charter and support HMRC to ‘live the Charter’ in its day-to-day activity.

The 2021 to 2022 Charter annual report (published on 18 July 2022) reflects the first full year since the Charter was refreshed.

The main themes from the report were:

• customer services levels were below where HMRC wanted them to be for much of the year due to the choice to prioritise support to customers through the pandemic; this was reflected in stakeholder and customer feedback

• results from the 5 2021 annual customer surveys show that overall customer experience ratings fell back from previous increases in 2020 across all groups, and are now closer to 2019, pre-pandemic levels

• although HMRC made solid progress towards returning to normal operating levels over the course of the financial year 2021 to 2022; the challenges and uncertainties of the current economic and political environment may mean HMRC will need to make further priority decisions about service levels in the coming year

• HMRC continued to make progress to embed Charter standards across the department, but this is a long-term action; progress during 2021 to 2022 included improving communications to customers and improving the capability and skills of HMRC’s people in line with the Charter standards

• HMRC’s long-term transformational programmes (such as the Single Customer Account, Making Tax Digital and Unique Customer Record) are critical to HMRC achieving its vision to being trusted and modern and improving customer experience

The CEC commissioned direct contributions for the Charter Annual Report from two external sources: Charter Stakeholder Group and HMRC’s Independent Adjudicator.

The Charter Stakeholder Group noted that “customer service levels remain the single greatest concern, overshadowing any particular positive or negative behaviours”, and the Adjudicator commented that “embedding the Charter is still a work in progress”.

With the support of the CEC, HMRC is continuing its activities to embed the Charter into processes and services and ensure that HMRC staff have the skills needed to deliver Charter Standards. The CEC will push HMRC hard to show measurable improvements across all Charter standards at their quarterly meetings. Priorities include:

• keeping the customer view at the forefront of HMRC’s short, medium and long-term transformation activities, such as the Single Customer Account

• continuing to build improvements to the way HMRC communicates and interacts with customers and learning from the successful changes introduced through 2021 to 2022

• continuing efforts to bring the Charter standards to life across the organisation and strengthening HMRC’s focus on improving customer experience

• quantifying the improvements to customer experience and putting in place measures to demonstrate the effectiveness of HMRC activity in tackling the systemic drivers of a poor customer experience

The HMRC Board supports and recognises the importance of the HMRC Charter and has identified delivery against the standards as one of its priorities.

In accordance with the commitment made in the evaluation report HMRC has continued and will continue to raise awareness of the Charter, using quarterly reviews and the Charter annual report to monitor progress and identify and act on areas for improvement.

At the time of the evaluation, HMRC was also undertaking a programme of work to improve technical and core compliance capabilities, ensuring that HMRC’s officers have the resources, skills and capability to deliver the standards set out in the HMRC Charter. This was a long-term commitment which has been delivered via the development and embedding of an enhanced training and skills programme designed to develop and improve tax technical and core compliance capabilities by enhancing HMRC’s overall learning offer.

As highlighted in the evaluation report, the Customer Experience and Professionalism Programme in HMRC’s Customer Compliance Group (CCG) had already set clear standards expected from the quality of HMRC’s casework, which was used to drive improvements in professional capability, with HMRC’s new Civil Compliance Foundation Learning (CCFL) ensuring HMRC’s new trainees understand and apply the Compliance Professional Standards as part of their wider technical tax training. The Standards operationalise the Charter for CCG colleagues and set out ‘what good looks like’ in compliance casework.

The enhanced training focuses on developing compliance professionals who can deliver quality compliance casework, putting the customer at the centre of their work. The new Central Training Unit (CTU) was established and embedded as a ‘business as usual’ function from July 2021.

The CTU is responsible for delivering CCFL to all newly recruited compliance caseworkers, designed to ensure a consistency of understanding and approach across the organisation. The training delivered is subject to ongoing continuous improvement as HMRC evaluates the effectiveness of the learning offer and ensures that legislative changes are quickly incorporated into learning products. The success of centralising training and the impact of the new learning will be measured and tracked over the next 3 years, through surveys of trainees and managers, and customer quality measures.

The Civil Compliance Capability Team was established in April 2022 to bring together all work to further develop and deliver quality compliance learning products across CCG. It is responsible for the continued development of the CCFL, and further developing its learning offer for more experienced caseworkers and their managers into a centrally directed Continuous Professional Development (CPD) programme.

Evidence from HMRC assurance activity and customer feedback is being used to identify capability gaps and inform CPD priorities, thus ensuring that HMRC is well placed to deliver quality compliance case work which places the customer at the centre of its work.

As provided for in the evaluation report, HMRC’s work to improve technical tax and core compliance capabilities focuses on ensuring that HMRC officers have the resources, skills and capability to deliver the standards set out in the Charter. With the CTU and Civil Compliance Capability Team now established, this commitment continues to feed into core HMRC compliance training.

Supporting those who need extra help

The evaluation underlined how some customers need extra help while involved in a compliance enquiry because of their personal circumstances. The evaluation highlighted that raising awareness of new obligations was particularly challenging with harder-to-reach customers, which included those that are digitally excluded, have little or no experience of paying tax through Self Assessment, or do not use an agent to help them understand their rights and obligations.

There are also customers who may be hesitant to share their personal circumstances or vulnerabilities with HMRC. While most customers want to get their tax right first time, some need additional help to understand and comply with their obligations.

HMRC agreed that the Compliance Extra Support team would continue to provide and develop processes that help to ensure those who need extra help are identified and provided with appropriate support during enquiries (commitment 12), and that it would continue to engage with VCS organisations to provide support for individuals who need extra help (commitment 13).

HMRC aims to put customers at the heart of everything it does, making it effortless and straightforward for customers to pay the right tax and have a good experience when dealing with HMRC. The Charter sets out standards of behaviour that customers can expect and what HMRC expects from customers. Alongside the Charter, HMRC has published the principles of support for customers who need extra help, providing tailored support, at the earliest opportunity.

HMRC recognises compliance checks can be challenging and stressful for customers and continues to work with customers to make things as straightforward as possible, operating fairly and sensitively and taking account of customer circumstances and needs. HMRC has expanded the Extra Support service to cover compliance checks, providing expert advice and support to caseworkers managing a compliance check to help customers whose health and/or personal circumstances mean they find the process more difficult to understand or stressful.

HMRC collaborates with external partners through the Compliance Reform Forum, OCAB and Customer Experience Advisory Group and co-create guidance products which are then promoted through partner platforms to help widen audience reach.

HMRC continues to deliver on this commitment: continually working to identify those that need extra help and ensuring they are provided with appropriate support; this is a core part of how HMRC works. HMRC, continually looks to improve processes to make it effortless and straightforward for customers to pay the right tax and have a positive experience.

Key achievements are:

• 6,459 extra support referrals have been made since the formation of the CCG Extra Support Team in January 2020 to 31 January 2023

• learning products and awareness sessions have been developed and delivered for compliance staff to help them identify customers who need extra support and to understand the reasonable adjustments that should be put in place, according to needs

• introducing a ‘warm handover’ when cases are passed from Compliance to Debt Management at the end of a compliance check, ensuring customers in need of extra support continue to receive this if any additional liability is established

• improving over 1,000 of HMRC’s most used letters and factsheets, simplifying language used and directing customers to available help and support

• working with external partners to co-create a series of 5 YouTube videos to support customers during a compliance check, with unrepresented customers a major part of the target audience

• extending this series, following positive feedback from external partners and almost 47,000 views, to include 4 further videos covering Statutory Reviews and mediation potentially available via Alternative Dispute Resolution. HMRC continues to direct customers to these videos through caseworkers, letters, and support pages on GOV.UK

• developing and launching an Introductory Pack for compliance checks. This was co-created with external partners from the Compliance Reform Forum and developed to build the confidence and trust of customers from the outset, by being clear about why HMRC are making the check and what can be expected from the process, thereby ensuring customers and agents understand the help they can get. This pack is in use by teams carrying out Income Tax checks into Self Assessment tax returns, with work to extend this to other taxes

• looking at communications and guidance to help customers understand their future obligations and where they can access support following the completion of a compliance check

• continuing to partner with the Compliance Reform Forum so members can feed their insight into work programmes. For example, HMRC has engaged on a range of specific projects and issues including problems identified in the administration of the Digital Disclosure Service and compliance issues around the High-Income Child Benefit Charge

• introducing a Compliance Check Exit Survey to understand and measure customer confidence and experience in respect of compliance activity, feeding into continuous improvement activity

HMRC continues to explore new ways of supporting those customers who need extra help. Most recently, in October 2022, Samaritans and HMRC launched an 18-month project to improve the support offered by HMRC to its customers. Samaritans will provide HMRC’s Extra Support Teams with guidance and coaching to build confidence and capability to help customers who might be in vulnerable circumstances. HMRC, where needed, will be able to signpost customers to personal specialist emotional support through a dedicated Samaritans helpline. As well as staff support, Samaritans will be sharing expertise on how to look after customers in vulnerable circumstances.

Ensuring that the public trust HMRC to apply powers proportionately and consistently

The evaluation identified concerns over the governance of some HMRC decisions and a perception that HMRC was not always applying its powers proportionately and consistently. Some respondents raised concerns that customers’ representations were not fully taken into account when decisions were made. It was suggested that as well as building public awareness of customers’ obligations HMRC should also build public awareness of customers’ rights.

Evidence shows that there remains a determined minority who seek to avoid tax, and who exploit safeguards that are intended to protect the compliant majority to prolong disputes and defer paying the right tax. Some of HMRC’s powers introduced since 2012, including the GAAR, FNs, Accelerated Payment Notices (APNs) and the DPT Charging Notices, are designed to help HMRC tackle this behaviour by changing the economics of these disputes or encouraging settlement. These powers are necessarily designed to be far-reaching and incentivise these customers to pay the tax due.

The evaluation felt that more could be done to build awareness of HMRC’s approach to using powers and to counter the perception that these powers may be used inappropriately. HMRC was encouraged to do more to raise public awareness of how it has responsibility to protect the Exchequer, including using powers to change the economics of a dispute and incentivise early payment, balanced with the need to take individual customers’ circumstances into account.

HMRC agreed to explore how improving awareness around internal governance processes could promote public trust in decisions to apply the GAAR, APNs, FNs and the powers underpinning the DPT (commitment 14) and to seek views from customers, agents and their representatives on opportunities to improve awareness and uptake of the statutory review process (commitment 15).

Following exploration with internal stakeholders a decision was taken to use a new collection page, which was developed and published on GOV.UK in September 2022. This page sets out how HMRC aims to resolve civil tax disputes and brings together information on internal governance processes for resolving tax disputes into a single place. It includes information on decisions to apply the GAAR, APNs and FNs, supporting customers by making it easier to find relevant guidance. HMRC will continue to evaluate what further information can be published around HMRC’s wider internal governance processes as this page develops.

Following the agreement to seek views on opportunities to improve awareness and uptake of the statutory review process a project commenced in November 2020 to review the scope of statutory reviews for HMRC, customers and the Tribunal. An external research consultant, Ipsos MORI, undertook a series of interviews with customers and agents who had appealed directly to the Tribunal without requesting a statutory review, to explore attitudes towards and barriers preventing engagement with statutory reviews. In addition to this external research, HMRC undertook parallel engagement with external representatives (engagement was undertaken with LITRG, ICAS, UK200, AAT, ATT, CIOT, Confederation of British Industry (CBI) with further consultation facilitated through the OTS).

The key findings were that there was a lack of awareness of statutory review as an avenue to resolve disputes and that there was confusion caused by the poor information about reviews in decision notices and published guidance. The Ipsos MORI report was published on GOV.UK.

As a result of the consultation and external research responses, HMRC resolved to focus on improving communications regarding appeal and review options available for customers:

• guidance on GOV.UK has been improved to explain more clearly the appeal and review options

• work is currently underway to reconsider Factsheet HMRC 1 (HMRC’s main information source explaining to customers how to dispute a decision made by HMRC), the recommendation being that this factsheet is replaced by an updated product

• specialist guidance is being made available both online and in printable form to better explain the appeal and review options

• work is also underway in respect of decision notices, to improve the way appeal and review rights are explained

• steps are being taken to ensure information available to call handlers in the Customer Service business area contains clear guidance to share with customers as required

• work has been commissioned to explore the development of a digital portal to allow customers to make their request for a statutory review directly via their on-line tax account (indicative timeframe is 2024 to 2025)

• awareness articles have been published in stakeholder publications and material drawing attention to the benefits of statutory reviews shared with representative groups:

Date	Stakeholder publication
August 2020	Individuals Stakeholder Forum
November 2020	Top 100 digest
November 2020	Parliamentary Digest
December 2020	HMRC Employers Bulletin
February 2021	Tax Adviser magazine
March 2021	Dispute Resolution Subgroup meeting
May 2021	Joint VAT Consultative Committee meeting

• a webinar was held with the Professional Fee Protection Group on 15 September 2021 where the statutory review process was explained

• the research undertaken and actions taken to address research findings were also discussed with 300 external participants

In line with the commitment, HMRC has undertaken considerable consultation seeking the views of customers, agents and their representatives on opportunities to improve awareness and uptake of the statutory review process. Changes have been made to GOV.UK guidance and a programme of work put in place to deliver improvements to the factsheet and decision notices.

Putting things right and the use of penalties

HMRC wants to help customers meet their obligations. Where a customer makes a mistake, HMRC will investigate the circumstances in which the error arose and consider a customer’s specific actions and behaviour as part of any decision about applying penalties. This includes considering the customer’s openness and engagement with HMRC. The evaluation highlighted that in some areas HMRC could do more to support customers and counter any perception that powers may have been applied inappropriately.

Issuing penalties appropriately and reasonable excuse

HMRC agreed to review and update guidance to clarify the range of factors that may contribute to reasonable excuse, taking account of an individual’s personal circumstances, supporting this work by strengthening training products, including case studies, to help build capability, confidence and consistency of approach where HMRC’s officers are considering the application of reasonable excuse (commitment 16). HMRC also agreed to update guidance on FNs, APNs and the RTC, in consultation with agents and their representatives (commitment 17).

A new updated chapter on reasonable excuse has been published in the Compliance Handbook. The new guidance is the central technical guidance used by all staff across HMRC when considering reasonable excuse. This single guidance product ensures a consistent application of reasonable excuse in areas where previously this appeared not to be the case, with all references to reasonable excuse linked to this updated guidance. The operational guidance has been updated to include links to the new technical chapter for staff to use in their work. HMRC has trained officers in line with the new guidance to ensure a consistent approach, with training on reasonable excuse for trainees and experienced caseworkers provided through Continuous Professional Development. Internal governance and controls to support decision making have also been strengthened.

The clarified and updated guidance on reasonable excuse reflects feedback and contributions from HMRC specialists and external representative bodies ^{[footnote 5]}. This more detailed guidance includes how to deal with reasonable excuse where mental/physical health issues are the reason for not meeting an obligation, with further guidance on the ignorance of the law for example, where customers are unaware they had a legal obligation to do something or misunderstood an obligation. It also includes more detailed guidance on caselaw following the Upper Tribunal case of Perrin when looking at reasonable excuse. This case considered the test to be applied when a taxpayer is relying on the defence of reasonable excuse, whether the excuse must not only be genuine but also objectively reasonable taking into account circumstances and attributes of the taxpayer.

Following the publication of revised reasonable excuse guidance, the guidance on the RTC was also revised. This was shared with the Powers and Safeguards Forum and following feedback was refined further before publication. Clear links from the additional RTC guidance to the updated guidance on reasonable excuse were included to ensure consistency. This will ensure those dealing with RTC cases do not develop their own idea of reasonable excuse but rather use the agreed guidance on reasonable excuse and apply that in the context of the RTC and the individual case.

Updated guidance on FNs and APNs was paused to give time to consider the implications for the scope of the regime in light of the Supreme Court judgment in Haworth. The judgment concerned the required level of confidence HMRC would need to have that a relevant judicial ruling would defeat the tax arrangements used by the recipient of a Follower Notice. Draft guidance was subsequently shared with the Powers and Safeguards Forum and refined prior to publication. The updated guidance on FNs and APNs has now been published.

Helping those in financial hardship

While the evaluation found broad support for HMRC’s direction of travel in supporting customers to pay their debts, some felt that HMRC could do more to help customers understand their rights, options, and obligations, as well as to improve the guidance around Simple Assessment and the powers to code out debt through the PAYE system.

HMRC committed to:

• continue to explore opportunities to help raise customers’ awareness of their rights as well as their obligations when paying tax debt through a time to pay (TTP) arrangement (commitment 18)

• consult with agents and their representatives to consider guidance updates on coding out of debt (through the PAYE system and Simple Assessment (commitment 19)

• consider how powers introduced since 2012 to recoup debt, especially the power to code out debt, could be used more widely to support those in financial hardship (commitment 20)

As part of HMRC’s Covid-19 response to support customers in financial hardship, an analysis of the impact of the pandemic on customers’ ability to pay was undertaken, which enabled the tailoring of collection strategies as the country emerged from COVID-19, ensuring HMRC targeted support for those customers faced with difficult financial circumstances.

HMRC worked collaboratively with internal and external stakeholders. In 2021, HMRC consulted external stakeholders ^{[footnote 6]}, views on time to pay letters to customers, the TTP internet content on GOV.UK and the coding out of debts (through the PAYE system) online guidance.

Following consideration of the feedback received:

• HMRC’s TTP online content on GOV.UK was refreshed, with updated content published on GOV.UK in November 2021, including HMRC guidance If you cannot pay your tax bill on time. This directs customers in financial hardship to services offering free debt advise; Money Helper (information on debt management and advise in England and Wales), Scotland Debt Solutions and Advice NI

• HMRC’s letter on TTP arrangements was revised, with HMRC now referring customers in financial hardship to the debt advice sector to seek free debt advice. This aligns with HMRC’s debt advice referral strategy of supporting customers in financial hardship out of debt. HMRC was not able to implement all the changes suggested for customers’ letters due to IT constraints, however these will be kept under consideration for future implementation

• HMRC’s online Simple Assessment and coding out of debt guidance was revised and published in the summer 2021 on GOV.UK:

  • Check your Simple Assessment tax bill

  • Pay your Self Assessment tax bill

Ensuring the Worldwide Disclosure Facility supports those putting things right

Customers can use the Worldwide Disclosure Facility (WDF), a part of the Digital Disclosure Service (DDS), to disclose a UK tax liability that relates wholly or in part to an offshore issue. During the Powers and Safeguards evaluation external stakeholders felt HMRC could make improvements to this facility.

To gain more insight into issues and deepen understanding, HMRC committed to host a roundtable meeting to discuss opportunities to improve customers’ experience where they correct their tax through the WDF in spring 2021 (commitment 21). A roundtable meeting was held on 27 May 2021 with external representatives from LITRG, TA, CIOT and ICAS, with a further meeting held on 6 October 2021.

The objective of the roundtables was to consider representations from representative bodies and interested parties on HMRC’s WDF. In particular the sessions explored what works well for customers (and could be built on) and what could be improved. HMRC continues to engage with external bodies on the WDF through the Offshore Forum ^{[footnote 7]}.

As a direct result of these discussions HMRC has delivered several improvements:

• protective assessments: there were concerns that customers receiving a tax assessment for years in their disclosure soon to be out of time for assessments would be confused by HMRC making protective assessments. HMRC introduced a bespoke letter to explain to customers what was happening and what they needed to do next

• escalated cases: some cases were taking a long time to be processed and customers were not clear on what was happening. HMRC introduced service level agreements to clear more disclosures within 90 days (October 2022 performance data shows 78% cleared with 90 days, a marked increase on the October 2021 figure of 28%) and stronger communication routes for customers, including named contact points for updates where cases are taking longer to review

• penalties: customers were concerned at receiving a penalty letter following their protective assessment. HMRC introduced a Behavioural Audit Tool, which is an outbound call to the customer to capture their circumstances and a follow up letter to guide customers through the penalty process. HMRC have also trained caseworkers on ‘Reasonable Excuse’ to ensure the guidance is applied appropriately

• DDS: The Compliance Reform Forum, a joint forum in which HMRC consults and communicates with representative organisations about changes to HMRC compliance checking activities, with a particular focus on the views of tax agents and their clients, wanted to be able to add additional information to support the disclosure. HMRC have added white space for inheritance tax cases and will evaluate how useful this addition is. In addition, HMRC is gathering feedback and testing what IT improvements could be made to the current DDS portal and accompanying processes and gathering requirements to support funding for a new DDS platform

Conclusion

This report sets out HMRC’s response to the evaluation of powers introduced since 2012 and the subsequent commitments made.

HMRC continues to recognise the need for an appropriate balance between the powers granted by Parliament and customer safeguards.

In many cases, the actions taken against the commitments, as set out in this report, form part of HMRC’s commitment to continuous improvement on which HMRC continues to collaborate with stakeholders and act upon their views. Actions have been taken across HMRC by many teams, demonstrating both the importance of the evaluation and HMRC’s ongoing commitment to build on the findings. The improvements made arise from the close working between HMRC and stakeholders to build a tax system that supports customers while maintaining high levels of compliance.

HMRC remains determined to maintain the highest standards of professionalism, while implementing its powers, and is committed to ensuring those powers are exercised in a proportionate way that builds public trust.

Annexes

Annex A

The 2005 to 2012 powers and safeguard principles  

Powers and the statutory obligations they impose need to be:

• set within a clear statutory framework
• easily understood – by customers, their agents and HMRC staff  
• straightforward to comply with
• proportionate to what HMRC needs to discharge its responsibilities or to protect the Exchequer from the risk assessed
• used consistently
• effective in providing the information HMRC needs to assess risk
• effective in discovering and dealing with non-compliance and in helping people to return to compliance

Safeguards for citizens and businesses must be:

• clear
• publicised
• accessible
• effective
• responsive to the nature and purpose of particular powers and sanctions
• conformant with human rights and other relevant non-tax legislation

Sanctions for non-compliance must be:

• set in statute
• clear and publicised
• proportionate to the offence
• used consistently
• effective in deterring non-compliance and returning the non-compliant to compliance

Annex B

HMRC Power and Safeguards Forum: terms of reference

Role:

The HMRC Powers and Customer Safeguards Forum (‘the Forum’) formerly the HMRC Powers and Customer Safeguards Implementation Evaluation Forum, was originally set up to provide expert input to the evaluation of the implementation of HMRC powers and safeguards introduced since 2012. The Financial Secretary to the Treasury (FST) announced this evaluation in a Written Ministerial Statement (WMS) that was laid in Parliament and published on 22 July 2019.

Following publication of the evaluation report on 4 February 2021, it has been agreed that the Forum still has a role in supporting and holding HMRC to account over the implementation and delivery of the 21 commitments made in that report.

The primary focus of the Forum remains HMRC’s powers and safeguards and supporting HMRC in building public trust, for example assisting in considering how implementation of future powers can be improved.

The forum membership will also be kept updated on the development of the remaining open strands of the 22 July WMS commitment work that are yet to be completed by HMRC, namely the customer experience strand.

Where the forum will also provide expertise advice on the powers and safeguards elements of the Tax Administration Framework Review.

Membership:   The Forum will be chaired by Paul Riley (Director, Tax Administration, HMRC).

Representatives from the following are invited to form the Forum membership:

• Association of Accounting Technicians (AAT)
• Association of Chartered Certified Accountants (ACCA)
• Association of Taxation Technicians (ATT)
• Citizens Advice
• Chartered Institute of Payroll Professionals (CIPP)
• Chartered Institute of Taxation (CIOT)
• Federation of Small Business (FSB)
• Institute of Chartered Accountants in England and Wales (ICAEW) Tax Faculty
• Institute of Chartered Accountants in Ireland (ICAI)
• Institute of Chartered Accountants of Scotland (ICAS)
• Institute of Financial Accountants (IFA)
• Law Society of England and Wales
• Law Society of Scotland
• Low Incomes Tax Reform Group (LITRG)
• Office of Tax Simplification (OTS)
• Tax Aid (TA)
• Tax Investigation Practitioners Group (TIPG)

HMRC representatives will include members from the following directorates:

• Counter Avoidance 
• Business, Assets and International 
• Tax Administration 
• Large Business

Meetings and attendance:

The Forum will meet at least quarterly, or more frequently as needed.

Standing invitations to attend Forum meetings may also be given to non-members at the Chair’s discretion, including other HMRC directorates representatives.

Members will be asked to provide deputies to represent their organisation if they cannot make a particular meeting and may also nominate others in their organisations to attend discussions with HMRC arranged through the forum.

Forum members may be approached between meetings for support in delivering a commitment for which they have indicated a particular interest.

The Forum may appoint sub-groups, as it sees fit, to consider specific issues. Any such groups will be subject to these terms of reference.

The Forum will be supported by a secretariat from HMRC.

Occasionally, when necessary, members may be asked to respond to issues by correspondence.

The last meeting of the year will incorporate an annual stocktake covering what the Forum has achieved in the year together with consideration as to what the future focus will be.

1. The campaign used social and traditional media and saw HMRC working with stakeholders such as Martin Lewis to encourage the accounts to be accessed. Visits to the Child Trust Fund page on GOV.UK peaked at 1,425 visits from an average of 374 a day as a result of the campaign. ↩

2. Together with stakeholder engagement activity, social media activity and use of HMRC’s Employer Bulletin, page views of GOV.UK guidance increased to 119,119 and HMRC received satisfaction scores of 55% to 75%. ↩

3. HMRC Fraud Forum, soon to be changed to the Tax Crime Alliance, a public-private partnership bringing together HMRC and professionally regulated tax advisers, legal professionals, and their professional bodies. The group was established to share knowledge and insight of the biggest tax crime risks and work collaboratively to reduce the overall threat and opportunities to commit tax crime in the UK. ↩

4. Membership: Administrative Burdens Advisory Board, Institute of Chartered Accountants of Scotland, Association of Chartered Certified Accountants, Chartered Institute of Payroll Professionals, Institute of Chartered Accountants in England and Wales, The Association of Taxation Technicians, Low Incomes Tax Reform Group, The Chartered Institute of Taxation, Institute of Financial Accountants. ↩

5. Representative bodies engaged with included CIOT, ICAS, ICAEW, Law Society, Low Income Tax Reform Group (LITRG), Tax Aid, ATT and TIPG. ↩

6. This included the LITRG, TA, CIOT, ICAS and the ICAEW. ↩

7. The Offshore Forum consists of stakeholders from across HMRC and the private sector. The Forum’s role is to considers and consults with representative bodies on policy and operational issues principally affecting HMRC’s approach to taxation of income and gains arising offshore relating to UK tax residents, which includes the use of and feedback in relation to the WDF. Membership of the Offshore Forum is HMRC, ATT, Association of International Accountants (AIA), CIOT, ICAEW, ICAS, LITRG, Deloitte, Ernst and Young, KPMG, Vialto, Society of Trust and Estate Practitioners (STEP), and IFA. ↩