Those of us in the tax and accountancy world are already aware of the changes which come into effect on 1 April this year. They are the new compliance regime and the new penalty regime which will apply to all taxes administered by HMRC.
I will be commenting in more detail on the changes on the forums in the next few days, but looking at the new rules is a reminder of how far things have changed since the Revenue and Customs merged, just a few short years ago.
Two Separate Traditions
I have worked with many ex-Revenue Inspectors during my time in the accountancy profession, and of course many of us VAT consultants were employed by HMRC as VAT Officers, carrying out VAT “control” visits. And how different we were!
The Revenue Inspectors were highly trained and did most of their work in the office, reviewing tax returns and requesting information through what was often lengthy correspondence with tax payers, taking years to agree the tax computations. They were used to being treated with respect and diffidence by taxpayers and junior staff alike.
VAT Officers, like me, had a couple of months of classroom training and some on the job training from more experienced officers. But we were generally out on our own doing inspections within three months of joining the department. We didn’t have the same type of technical or intellectual training, but we were expected to be hands-on and develop our own intuition about traders, enabling us to identify potential “underdeclarers” very quickly.
We’d go to the traders premises, ask the questions, carry out the compliance checks, come back to the office, write the report and issue the assessment within a few days. The whole thing was done and dusted and then we were on to the next pile of green folders.
The best of both worlds
The merger of the two departments has provided an opportunity to take the best of each tradition and use resources more effectively. VAT Officers and Tax Inspectors have always done excellent jobs when separate but I hope that they will appreciate the benefits of the new merged deparment and the use of merged resources.
VAT Officers now routinely request for information relating to PAYE or CT issues for their direct tax colleagues while carrying out VAT assurance visits. They can review the trader’s accounts before even setting foot on the trader’s premises and benefit from having much more information at hand before commencing their inspection.
Tax Inspectors can take advantage of the information obtained by their VAT colleagues during the VAT assurance visits and are learning from a much more “hands on” approach to inspection.
As a self-employed taxpayer I welcome the more efficient use of resources in the merged department and hope that it ensures that all forms of tax are collected and administered in a more cost effective manner in the future. It is of course still early days as far as HMRC is concerned, but the new legislation provides an excellent opportunity for both the old Customs and the old Revenue staff to take the best of each others’ traditions. And I hope it works for them and for us, the taxpayers!