The House of Commons Treasury Select Committee has published a well-informed Report on the workings of the Inland Revenue and the tax system; it is available at:
http://www.parliament.the-stationery-office.co.uk/pa/cm199899/cmselect/cmtreasy/199/19902.htm
The Report focuses on the Inland Revenue’s approach to encouraging compliance with tax obligations. It recognises the burdens imposed on small businesses. It takes into account the impact on resources of the Revenue’s new responsibility for functions previously carried out by the DSS. The Committee’s conclusions and recommendations include the following thoughts.
- The impact of Working Families Tax Credit should be thoroughly assessed and concrete evidence collected of benefits arising from payroll delivery.
- The Revenue should commission a study to investigate the extent to which employers are operating PAYE procedures in practice, particularly the P45 and P46 procedures for joiners and leavers; how the level of correct operation could be improved; and how the specific compliance costs relating to the P45 and P46 procedures could be reduced.
- The Revenue should be given a target to reduce taxpayers’ compliance costs.
- The Committee regards it as crucial that the Revenue meets its Self Assessment targets for 1999/2000 and achieves a significantly greater number of enquiries into later years’ Self Assessment returns than were opened into 1996/97 returns.
It is certain that the Government and the Board of Inland Revenue will consider the Report carefully; it remains to be seen what action they will take, and what results this will have.
On the last bullet point, one may forecast that what applies to individuals and trusts under Self Assessment will apply to companies under Corporation Tax Self Assessment; Parliament will expect the Revenue to police the Self Assessment system by enquiring into tax returns, and taxpayers will need to be ready.
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