Review of HMRC's Powers, Deterrents and Safeguards

Contents

Background

The Review of HM Revenue & Customs (HMRC) Powers, Deterrents and Safeguards ran from 2005 to 2012. It was a programme of consultation and legislative change to provide a modern framework of law and practice for tax administration. It’s aim was to secure the benefits of the merger of HM Customs and Excise and the Inland Revenue by aligning powers, deterrents and safeguards across the taxes and duties administered by HMRC, where it made sense to do so.

About the Review

The theme of the Review was to support those who try to get their tax right, but come down hard on those who seek an unfair advantage through failing to calculate, return or pay the right amount of tax.

The Review consulted on parts of its work as they were developed, feeding the results into successive Finance Bills. Changes to legislation were made in Finance Acts 2007, 2008, 2009, 2010, 2011 and 2012.

Here is a summary of the legislation that has been enacted and the date it comes into effect (PDF 92K)

Criminal investigation powers

The criminal investigation strand of work aligned criminal investigation powers across HMRC in Finance Act 2007, and extended intrusive surveillance powers to direct taxes in the Serious Crime Act which received Royal Assent on 30 October 2007.

Criminal Investigation Powers - more information

Penalties for errors and failure to notify

The review developed a new penalty framework for errors in tax documents and returns and failure to notify a new taxable activity, including late VAT registration. The new penalties started to come into effect for return periods stating on or after 1 April 2008, that are due to be filed on or after 1 April 2009.

New penalties - more information

Penalties for late filing of returns and late payment of tax and harmonisation of interest

HMRC will be implementing the new late filing and late payment penalties and interest provisions in Finance Acts 2009 and 2010 over a number of years.

New late filing and late payment penalties and interest provisions - more information

Compliance checks

The Review developed a new compliance checking framework, covering information and inspection powers, record keeping and time limits for assessments and claims, that started to come into effect from 1 April 2009.

Compliance Checks - more information

Payments, repayments and debt

The review made a number of legislative changes in Finance Acts 2008 and 2009 to support a programme of legislative, administrative and operational changes designed to make it easier for taxpayers to pay what they owe on time, support those who find themselves in temporary difficulties, and come down hard on those who seek to avoid their obligations by paying late or not at all.

Payments, repayments and debt - more information

Safeguards

The policy and practice of the Review of Powers is that whenever it considered specific tax legislation, it included a review of the relevant embedded safeguards.

Safeguards - more information

Publishing details of deliberate tax defaulters

Legislation in Finance Act 2009 enables HMRC to publish the names and details of individuals and companies who are penalised for deliberate tax defaults for tax periods commencing on or after 1 April 2010.

Legislation in Finance Act 2012 enables HMRC to publish the names and details of tax agents penalised for dishonest conduct with effect from 1 April 2013.

Publishing the details of deliberate tax defaulters - more information

Data-gathering powers (previously Bulk and specialist information powers)

Legislation in Finance Act 2011 modernised and brought these powers and safeguards in line with the compliance checking framework developed by the Review. They came into effect on 1 April 2012.

Data-gathering powers - more information

Bringing HMRCs information powers into line with international standards for tax information exchange

Finance Act 2012 included legislation to bring HMRCs information powers up to the standards required by the Global Forum on Transparency and Exchange of Information for Tax Purposes.

Bringing HMRCs information powers into line with international standards for tax information exchange - more information.

Excise compliance checks

Legislative changes in Finance (No 3) Act 2010 were made to create a robust compliance checking framework for excise duties that is proportionate to the risks in this area of work, which applied from 1 April 2011.

Excise modernisation and compliance checks - more information

Working with tax agents

Legislation in Finance Act 2012 addresses dishonest tax agents. This is expected to come into operation on 1 April 2013.

Working with tax agents - more information

Tackling offshore tax evasion

Legislation in Finance Act 2010 increases the sanctions available to HMRC for tackling offshore non-compliance. It sets out a new penalty framework for offshore non-compliance that will apply to Income Tax and Capital Gains Tax from the 2011-12 tax year.

Tackling offshore tax evasion - more information

Security for PAYE (Pay as You Earn) and/or National Insurance contributions (NICs)

Following legislation in Finance Act 2011, from 6 April 2012 HMRC may require employers to provide a financial security, backed by a criminal sanction for non-compliance, where they identify a serious risk of failure to pay PAYE and/or certain NICs.

Security for PAYE/NICs - more information

Simplification of regulatory penalties

The Review considered the modernisation, alignment and simplification of the range of penalties that HMRC can impose for failure to comply with regulatory obligations across the tax and duty regimes. It concluded that the benefits did not justify wholesale reform, and that changes should be made as and when opportunities arose.

The simplification of regulatory penalties - more information

Consultation

The Review of Powers committed to consulting widely at each stage in the development of policy and legislation. Consultation included: exploring policy options with the Consultative Committee; publishing documents; holding meetings and workshops with representatives of business and the accountancy and legal professions.

Consultative Committee

In June 2005 Ministers appointed a Consultative Committee to work with HMRC to consider options for future powers, deterrents and safeguards. Membership of the Committee was broad-based to reflect the perspective of the wider community including businesses of all sizes, employees and the tax-related professions.

The Committee met regularly and published minutes on the HMRC website. The Committee met for the last time in May 2012.

Implementation oversight forum

The forum was set up by Ministers to oversee the period of initial implementation of HMRC’s new powers and safeguards including post-implementation review and benefits realisation work. The first meeting of the forum was held on 30 March 2009 and it continues to meet periodically.

Implementation Oversight Forum - more information

Documents published

Details of all documents published since the Review of Powers was announced in March 2005, including consultation documents and summaries of responses.

List of published documents.

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