HMRC to ‘bear down’ on tax planning in updated vision

A CLAMPDOWN on tax planning, a transformation of its services for taxpayers and delivering a professional, efficient and engaged organisation are the three key objectives for HMRC in its updated single departmental plan.

The government department has outlined its main visions and objectives for the period between 2015 and 2020, while in the middle of cost-cutting procedures and a transformation of its digital tax services.

Tax planning crackdown

“Over this Parliament we will maximise revenues due and bear down on tax avoidance, tax evasion and other non-compliance through well-designed tax policy, a transformed compliance strategy and effective delivery through digital channels,” the updated report set out.

George Bull, senior tax pater at RSM believes that HMRC’s plan to tackle routine tax planning is “completely new” and “marks a sea-change in HMRC’s approach.”

“Make no mistake, an attack on routine tax planning would be a major shift in HMRC’s approach and would seem to pit the Administration (in the form of HMRC) against the Legislature (Parliament) which has enacted specific legislation for specific purposes,” said Bull.

HMRC is also looking to raise an additional £5bn a year by 2019 to 2020 by “tackling tax avoidance and tax planning, evasion and compliance, and by addressing imbalances in the tax system.”

Cost-cutting

Other objectives included in the single departmental plan involve transforming tax and payments for its “customers” through personalised digital tax accounts.

Between 2020 and 2021, the government department hopes the tax accounts will be delivering around £1bn of additional tax revenue by making it easier to pay the correct tax and reducing error. Last month, HMRC confirmed that it would be delaying the consultation documents on Making Tax Digital until after the EU referendum.

HMRC also looks to raise £27bn in compliance revenue between 2016/2017, and to increase the number of criminal prosecutions to 100 a year by the end of the current Parliament.

A recent NAO report slammed HMRC’s recent customer service record, revealing that HMRC’s service “collapsed” between 2014 and 2015 due to staff shortages as the government department embarked on cost-cutting procedures.

The  updated departmental plan looks to engage its people by “ensuring they are valued for their skills, knowledge and expertise and that they have the right tools to do their job and deliver outcomes”, while also making £1.9bn in “efficiency savings” over this Parliament, including £203m in savings between 2016 and 2017.

A HMRC spokesperson told Accountancy Age: “There is no change to the normal, everyday use of tax reliefs as intended by Parliament. Tax reliefs are in place to encourage certain actions such as building up a pension pot, investing in your business or saving for a rainy day and that is overwhelmingly how they work. But, when reliefs are manipulated in a way the law does not intend, to achieve an unfair tax advantage it is only right that HMRC steps in on behalf of the vast majority of taxpayers who play by the rules