HMRC Powers

Tax payments, repayments and debts

Three separate changes to the current law will be introduced in Finance Bill 2009 to:

• introduce voluntary managed payment plans (MPPs). These will allow taxpayers to spread their income tax or corporation tax payments equally over a period straddling the normal due dates
• allow HMRC to collect small debts they are owed through the Pay As You Earn (PAYE) system
• provide a third party information power requiring companies and businesses to supply HMRC with contact details for people who are in debt to HMRC with whom they have lost contact.

Making MPPs available requires necessary changes to HMRC’s computer and accounting systems and therefore they will not be introduced before April 2011. The collection of small debts through PAYE will also require changes to HMRC’s systems, and is likely to begin from April 2012.

The third party information power to trace missing debtors will have effect on and after the date that Finance Bill 2009 receives Royal Assent.
Comment

The introduction of MPPs will help taxpayers with their cash flow, by allowing them to spread their payments over a number of instalments before and after the normal due date. The plans will be voluntary and taxpayers will be protected from the normal interest and penalties consequences of paying late. However we will have to wait some time before it is operational.

Compliance checks

Legislation will be introduced to apply the compliance checking framework that has recently been introduced for the main taxes to all other taxes which HMRC administers. The legislation will apply to the environmental taxes (aggregates levy, climate change levy and landfill tax), IHT, insurance premium tax, SDLT, stamp duty reserve tax and petroleum revenue tax.

The compliance framework will consist of the following elements:

• aligned record-keeping requirements
• new inspection and information powers including a modernised HMRC valuation power
• better aligned time limits for making tax assessments and claims.

The record-keeping requirements, information and inspection powers are intended to have effect from 1 April 2010. Time limits for making assessments and claims need a transitional period and are not expected to become fully operative until 1 April 2011.