REFORM of HM Revenue & Customs’ communications strategy, further consultation on making tax digital and reviews of all major tax reforms are just three recommendations from the House of Lords to HMRC within its review of the Draft Finance Bill.
The House of Lords Economic Affairs Committee said that most taxpayers are completely unaware of impending changes to the tax system, in particular changes to the taxation of savings and dividends.
The committee also looked into the bill providing new powers for HMRC to issue simple assessments of an individual’s tax liability, and the establishment of the Office of Tax Simplification on a statutory basis.
On changes to the taxation of savings and dividends, which will see the elimination of the tax deduction scheme for interest, the committee notes that HMRC’s current communications strategy is “simply inadequate”. The taxman should create a public awareness campaign “to inform savers of both their tax obligations and the need to review their savings choices in the light of the changes”, it said.
Lord Hollick, chairman of the committee, commented: “Changes to how we are taxed can have a huge impact on financial planning including savings and pension arrangements.
“It is vital that taxpayers know what it is expected of them and how much they will be taxed. We are concerned that the government’s consultation and communication about imminent and important changes in the Finance Bill has been so poor.”
‘Simple’ tax assessments welcomed
Hollick and the committee supports the bills changes to introduce simple assessments to assess tax liabilities, as it could remove the ‘burden’ of self-assessments for a number of low-income tax payers, but has called on HMRC to clarify its stance on its implementation.
The committee has also praised the work of the OTS and agrees with the bill’s decision to place the department on a statutory basis, recommending that it “should be given a bigger role in the design of tax policy and greater resources to support its important work”.
In regards to HMRC’s controversial Making Tax Digital initiative, the committee has recognised concerns from businesses that the notion of quarterly reporting could be a prelude to quarterly payments to HMRC, resulting in greater compliance for SMEs. The committee has now urged the department to commence a full assessment into these concerns.
HMRC has outlined a change in VAT policy to the treatment of dwellings that have been formed from either the construction of new buildings, or from the conversion of non-residential buildings
Let us hope that valuable asset protection vehicles are not made prohibitively burdensome or abolished in the desire to “simplify” IHT
Freelancers and micro-businesses still need more information about the government’s plans to make tax digital
The government is pressing ahead with changes to the way it taxes individuals with a foreign domicile