More immediately, new powers for HMRC are also on the cards with the following proposed reforms being consulted on:
- Introducing requirements for additional information to be provided upfront in respect of claims and reliefs (similar to the information requirements introduced for R&D claims);
- Aligning HMRC’s revenue correction powers across the different taxes;
- Enabling HMRC to open a partial enquiry into a specific issue or section of a return; and
- A new power to issue a notice requiring a taxpayer to self-correct their return or provide an explanation as to why no amendment is required;
The consultation will run for 12 weeks from 30 October 2024 to 22 January 2025.
These reforms (if implemented) could have a significant impact on taxpayers with the introduction of additional information requirements, and the new power to issue a notice requiring a taxpayer to self-correct their return appears to be a move to add some teeth to HMRC’s recent ‘upstream’ approach to compliance of issuing ‘nudge’ or ‘one to many’ letters. The Government’s hope is that these measures could save time on both sides in dealing with enquiries and HMRC assessments.
The alignment of revenue correction powers across the taxes seems to be a sensible move and the proposed introduction of a requirement for HMRC to explain why they are making a correction and for taxpayers to provide evidence to support their rejection could avoid the need for a full enquiry.
The proposed partial enquiry power is notable as it would allow HMRC to open a partial enquiry into one aspect of a return without affecting their power to open a full enquiry or another partial enquiry at a later date (within time limits). While the partial enquiries are aimed at improving the taxpayer experience by making enquiries better targeted and more swiftly resolvable, there is a risk that this could have the opposite effect in some cases, prolonging what may have been a single enquiry into a series of enquiries.
