Alex Foster

Written by: Alex Foster

Alex Foster

Partner

Can HMRC build back better after the pandemic?

Have any changes to HMRC’s processes, brought about by coronavirus, be kept or expanded? In response to coronavirus HMRC put certain temporary measures in place to enable taxpayers to meet their obligations. But should these be made permanent? For example, in recognition of the difficulties created by the social-distancing measures, HMRC agreed to accept certain inheritance tax forms without wet signatures. This was a very welcome measure, and particularly helpful where more than one signature is required.  

Also, more recently HMRC agreed to accept digital or electronic signatures on certain forms, namely forms authorising an agent (64-8), claiming income tax relief for employment expenses (P87) and marriage allowance claims. Could these recent developments be a sign that HMRC is becoming more comfortable with digital or electronic signatures? While there is a need to balance the flexibility this provides with any increased security or compliance risks, many would welcome HMRC taking this a step further by being more consistent across all taxes. For example, allowing digital signatures on self-assessment tax returns submitted on paper, especially where this is due to software specification issues from HMRC. 

The restrictions in place have meant that there has been an increased reliance on emails and virtual meetings. We have seen HMRC becoming increasingly willing to communicate by email and would welcome more of this. Where email has been used to handle enquiries, this has proved a far quicker process than paper correspondence. Taxpayers want such matters cleared up quickly and email reduces the time and cost of doing so. 

HMRC has been quick to issue guidance in certain respects. For example, with regard to the impact on the statutory residence test, the clarity on coronavirus restrictions qualifying as an exceptional circumstance for the 60 days test was very helpful. However, now that we are coming to the end of the first full tax year impacted, this may not be sufficient, and individuals may find themselves tax-resident for 2020/21 solely due to the coronavirus restrictions. These people would appreciate swift guidance on any concessions HMRC feels appropriate. 

These are just a few examples where HMRC could build on the positive changes that have arisen due to the pandemic, and it should consider whether these should be permanent changes in the future.

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