HMRC has published new guidance Covid-19: how HMRC will continue to support customers and the economy setting out HMRC’s principles for next steps around tax collection, compliance checks and collection of tax debts, following the policy changes and support schemes introduced in response to coronavirus in 2020:
Tax collection: taxpayers should continue to file returns as normal, although HMRC will take a ‘sympathetic approach’ to those struggling to pay or file returns on time, accepting the impact of coronavirus as a reasonable excuse and ‘offering longer periods to request a review or appeal the decision’.
Compliance checks: in the short term, HMRC will usually give businesses and individuals affected by coronavirus time to focus on more urgent priorities (including keeping their business afloat) but will open enquiries in certain situations, for example:
where HMRC suspects criminal activity or deliberate non-compliance;
where not doing so would mean missing a deadline preventing HMRC ‘from ever collecting the unpaid tax’;
where HMRC is protecting employees (for example in relation to national minimum wage enforcement); or
for a mandatory check.
Although businesses will not be penalised for delays as a result of coronavirus, interest will still apply on any unpaid tax. HMRC will also continue to prioritise tackling fraud and will open enquiries accordingly. The document notes HMRC’s approach to assessing whether in-person visits need to take place or whether checks can be carried out remotely. HMRC has published separate guidance in Factsheet CC/FS1K on what businesses should expect if an in-person visit is deemed necessary during coronavirus restrictions.
Debt: HMRC has restarted debt collection activity, taking a ‘compassionate and common-sense approach to dealing with people with debts or who are concerned about their ability to meet tax obligations’. The department will initially focus its debt-collection efforts on those least affected by the pandemic and most able to pay their tax debts. The main thrust of HMRC’s message on tax debts is for businesses and individuals to contact HMRC, whether to discuss a time to pay arrangement or more general support, for example where a business has used a support option such as deferring VAT payments or the 2019–20 income tax second payment on account.
Alongside administering the job retention scheme and self-employment income support scheme, HMRC has made more than 60 temporary policy changes during the pandemic, including:
measures to ensure the NHS has access to necessary resources, for example by ensuring there were no adverse pensions tax consequences for retired NHS staff who returned to work;
relaxations to deadlines and demands for taxpayers, including the three-month extension to appeal deadlines where individuals have been affected by coronavirus;
keeping goods moving at the UK borders, with measures to allow businesses to carry out some customs clearances from their business premises, removing the need to present goods in other locations; and
ensuring the continued effective operation of the tax system during lockdown, for example by introducing proxy stamping procedures enabling company mergers to continue.
Much of the lockdown work has been undertaken with a majority of HMRC staff working from home. A separate report on HMRC’s performance from April to June 2020, notes that ‘the IT which underpinned the coronavirus support schemes was designed, built and delivered from kitchen tables and spare bedrooms; busy customer service staff answered queries remotely from their own homes for the first time; and 90% of HMRC’s 60,000 workforce were able to immediately work remotely to help stop the spread of the virus when the country went into lockdown’.
In light of HMRC’s response to the coronavirus challenges, the document emphasises the need for the tax system to be more adaptable, resilient and responsive, as encapsulated in the Treasury’s strategic plan Building a trusted, modern tax administration system.
HMRC has published new guidance Covid-19: how HMRC will continue to support customers and the economy setting out HMRC’s principles for next steps around tax collection, compliance checks and collection of tax debts, following the policy changes and support schemes introduced in response to coronavirus in 2020:
Tax collection: taxpayers should continue to file returns as normal, although HMRC will take a ‘sympathetic approach’ to those struggling to pay or file returns on time, accepting the impact of coronavirus as a reasonable excuse and ‘offering longer periods to request a review or appeal the decision’.
Compliance checks: in the short term, HMRC will usually give businesses and individuals affected by coronavirus time to focus on more urgent priorities (including keeping their business afloat) but will open enquiries in certain situations, for example:
where HMRC suspects criminal activity or deliberate non-compliance;
where not doing so would mean missing a deadline preventing HMRC ‘from ever collecting the unpaid tax’;
where HMRC is protecting employees (for example in relation to national minimum wage enforcement); or
for a mandatory check.
Although businesses will not be penalised for delays as a result of coronavirus, interest will still apply on any unpaid tax. HMRC will also continue to prioritise tackling fraud and will open enquiries accordingly. The document notes HMRC’s approach to assessing whether in-person visits need to take place or whether checks can be carried out remotely. HMRC has published separate guidance in Factsheet CC/FS1K on what businesses should expect if an in-person visit is deemed necessary during coronavirus restrictions.
Debt: HMRC has restarted debt collection activity, taking a ‘compassionate and common-sense approach to dealing with people with debts or who are concerned about their ability to meet tax obligations’. The department will initially focus its debt-collection efforts on those least affected by the pandemic and most able to pay their tax debts. The main thrust of HMRC’s message on tax debts is for businesses and individuals to contact HMRC, whether to discuss a time to pay arrangement or more general support, for example where a business has used a support option such as deferring VAT payments or the 2019–20 income tax second payment on account.
Alongside administering the job retention scheme and self-employment income support scheme, HMRC has made more than 60 temporary policy changes during the pandemic, including:
measures to ensure the NHS has access to necessary resources, for example by ensuring there were no adverse pensions tax consequences for retired NHS staff who returned to work;
relaxations to deadlines and demands for taxpayers, including the three-month extension to appeal deadlines where individuals have been affected by coronavirus;
keeping goods moving at the UK borders, with measures to allow businesses to carry out some customs clearances from their business premises, removing the need to present goods in other locations; and
ensuring the continued effective operation of the tax system during lockdown, for example by introducing proxy stamping procedures enabling company mergers to continue.
Much of the lockdown work has been undertaken with a majority of HMRC staff working from home. A separate report on HMRC’s performance from April to June 2020, notes that ‘the IT which underpinned the coronavirus support schemes was designed, built and delivered from kitchen tables and spare bedrooms; busy customer service staff answered queries remotely from their own homes for the first time; and 90% of HMRC’s 60,000 workforce were able to immediately work remotely to help stop the spread of the virus when the country went into lockdown’.
In light of HMRC’s response to the coronavirus challenges, the document emphasises the need for the tax system to be more adaptable, resilient and responsive, as encapsulated in the Treasury’s strategic plan Building a trusted, modern tax administration system.
