KPMG responds to latest consultation on tax administration framework

KPMG in the UK has responded to HMRC’s consultation on reforms to enquiry and assessment powers, penalties and safeguards

KPMG in the UK responds to HMRC’s consultation on reforms to enquiry and assessment powers

On 15 February 2024, as part of their Tax Administration Framework Review, HMRC consulted on reforms to their enquiry and assessment powers, penalties and safeguards (statutory reviews, appeals and alternative dispute resolution). In addition to publishing a consultation document, HMRC hosted five virtual workshops focusing on different reform opportunities. Representatives from KPMG in the UK contributed to the workshops and submitted a detailed written response to the consultation.

Our consultation response noted that the framework was complex and had grown organically over time and we recommended that HMRC approach the matter holistically rather than using a piecemeal approach. With regard to the headline matters, the following comments were made:

  • Enquiry and assessment powers: the best features of the existing rules should be identified, preserved and replicated and should balance simplicity and ease of administration, certainty and finality, and treating taxpayers fairly;
  • Penalties: proportionality should be at the heart of any reforms. This means imposing penalties that appropriately reflect the taxpayer’s individual circumstances and the seriousness of the error; and
  • Safeguards: we support the increased use of statutory reviews and alternative dispute resolution where they represent a more efficient and cost-effective way of resolving disputes between taxpayers and HMRC.

In addition to these overarching points, we commented on detailed aspects of the tax administration framework including consequential amendment powers, overpayment relief claims and the right to seek to postpone the payment of tax pending the outcome of an appeal. We also gave feedback that was specific to certain taxes and sectors including VAT and stamp taxes.

HMRC are now analysing the responses to prioritise areas for reform. We understand that HMRC are likely to undertake further, more targeted consultations later this year or next year, with a view to enacting reforms in the following two years if the legislative programme permits and we will continue to engage with the process.

Please contact the authors for further information or more broadly if they can assist with your interactions with HMRC.