Why the accountancy sector is putting their foot down against Direct Recovery of Debts

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Avid readers among you will know I wrote a blog post at the end of July outlining the proposed plans from HMRC in respect of DRD (Direct Recovery of Debts). In my post I expressed concerns over HMRC’s approach to the DRD consultation process in that, it by-passed the initial fact-finding and evaluation stage, a precursor to many similar consultations over the last few years, such as the 2013 HMRC engagement over their proposal to close their estate of enquiry centres.

While many within the taxation and accountancy sector were quick to express concern over the superficial examination of taxpayer-safeguards; of prime concern to all was the complete absence of any exploration of the possible need for any independent oversight.

Since then, it’s certainly fair to say a lot has happened. Professional bodies and taxation service providers, including ACCA, CIOT, ATT, AAT, ICAEW and CIPP have all come together under Taxation Magazine’s #APowerTooFar campaign to strongly oppose plans set out by HMRC in their current format.

Paul Aplin, former chair of ICAEW’s Tax Faculty, told me “the Taxation campaign has my full support and I have found clients keen to sign the petition. All that is being sought is enough time for a genuine dialogue so that we end up with an effective – and safe – way to deal with those who can pay but who can’t be bothered. That seems to me to be a very reasonable request for us to make”.

I too urge you to sign the #APowerTooFar campaign petition, if you haven’t already.

Earlier this month, I was asked to write a lead article for Taxation on DRD, entitled ‘On the way to where?’, which set out my thoughts and feelings of why we (AAT)  are so concerned about the proposed plans. But to give a quick summary:

1)     The fact that there is a complete absence of independent oversight

Even with the best will in the world, HMRC can and does sometimes make mistakes. I believe that some form of independent oversight is an essential safeguard to ensure that the needs of HMRC are balanced with the rights of the taxpayer.

2)     HMRC have merged stages one and two of the normal consultation process

In the way that HMRC has approached the DRD consultation process they are going against the HM Treasury and HMRC’s ‘Tax consultation framework’, published in 2011. If HMRC were to take a step back and treat their May condoc as the first in a three stage process then they are more likely to reach the outcome they desire, but in a more appropriate way. This could involve the release of  a further condoc seeking to build on the feedback received in response to their first consultation.

When asked to supply a quote for my article Mike Truman, Editor of Taxation, said “the #APowerTooFar campaign was deliberately designed to be inclusive, and to cover all those who wanted a rethink of DRD, from those who wanted it scrapped to those who wanted it amended. But to do the job properly, significant further consultation needs to happen. The proposals should not be rushed through in Finance Act 2015, when the time for discussion and debate will inevitably be truncated”.

Where do we go from here?

I firmly believe that we cannot simply say “no” to DRD.  Instead, we need to join together to persuade HMRC of the need to slow the DRD consultation process down. In the words of AAT’s Director of Professional Development, Adam Harper: “In our response we strongly recommend an extension to the consultation process. This would allow HMRC the scope to properly address the myriad issues that have emerged and to provide clarity and certainty in relation to the numerous unanswered questions that the proposals, as they currently stand, throw up. At the very least, this will demonstrate that HMRC have the willingness and capacity to listen on what is clearly a sensitive subject”.

AAT wants to hear your views on DRD. Have your say here by completing this quick survey https://aat.typeform.com/to/Ys5A79

Brian Palmer , former tax policy adviser for AAT..

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