By Marcus Leach
HM Revenue and Customs (HMRC) has announced an extension of its trial of the Single Compliance Process (SCP).
SCP is aimed at reducing the compliance burden for small to medium sized businesses (SME’s) and improving its own efficiency, but will SCP equal faster enquiries, asks EDF Tax.
Head of the firm’s Tax Investigations team, Iain Macleod goes on to question whether officers following set lines of enquiry and target timescales will have sufficient flexibility to reach the right result for the taxpayer.
“Enquiries can drag on for many years, so anything that speeds up enquiries, encourages HMRC to move on where nothing significant emerges and involves early dialogue is to be welcomed. It is also good that HMRC recognises how important it is to get this right and is taking more time over the trial," a former tax inspector for 26 years, Iain said.
“Whether the trial will ultimately identify techniques and processes that will routinely see enquiries concluded quickly and thus make significant inroad into cases, however, is yet to be seen.”
When using the SCP, HMRC will share with the taxpayer defined aspects which it believes are potential risks and only pursue lines of enquiry on that basis, rather than take a fishing trip into all of the client’s books and records.
“There is a big emphasis on openness, early dialogue and a collaborative approach. On the face of it, this appears sensible and broadly makes the SCP beneficial to the taxpayer,” says Iain, “but there are no assurances that an officer won’t query any other areas once he is engaged in the enquiry. Therefore, the potential for lengthy and more probing enquiries still exists, particularly as there are no legislative requirements for an officer to stay within the set lines of a SCP enquiry.
“On the other hand, will officers working to a firm process and a fixed timetable be given sufficient flexibility? For example, the SCP encourages face to face meetings. These can be valuable but not all taxpayers are comfortable meeting tax inspectors and one hopes that HMRC will appreciate that some people would prefer to explain things in writing.
“There must also be a risk that targets and pressures to meet HMRC deadlines will lead to premature conclusions and unnecessary trips to the tribunal to resolve points that were not given sufficient attention earlier.”
The trial has been extended to 31 March 2012, during which time HMRC expects to conduct up to 1200 enquiries in 16 locations across the UK. Once lessons have been absorbed, the SCP will be rolled out from May 2012.
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