HMRC’s working practices are changing to cope with new demands placed on them. But the old leopard rarely changes its spots and whatever the practice, it is (tax) revenue that is sought.
What has been happening with HMRC?
At the commencement of the Covid-19 pandemic HMRC put forward it’s koala face, and offered taxpayers a suspension in its investigative activity. A useful pause for some.
Staff have been redeployed to make the Government’s support measures work, a jump in the trench moment perhaps.
But underneath the unexpected recent challenges lies good old HMRC and old leopards really do not change their spots.
The day lockdown was partially lifted, HMRC’s investigative arm, the Fraud Investigation Service (FIS), was back to business, sort of as normal.
What are HMRC doing?
HMRC activity is back. And they’re not just clearing up existing cases, they’re starting new ones too.
But HMRC has recognised it cannot just simply do things as it used to with social distancing in place. So it is getting creative.
- For now, HMRC will accept scanned documents, where previously it insisted on “wet signed” originals
- HMRC has boosted it’s ability to receive “chunky” email attachments beyond the historic general limit of 2MB
- Meetings are being conducted using Zoom or Microsoft Teams
- Creative use of office access allows Inspectors to have the ability to send out communications that need to be transmitted by recorded post
Are HMRC going soft?
HMRC may have become more imaginative than it is usually given credit for, and hopefully they’re still displaying a bit of the koala face but it still seeks revenue from its operations.
Just as the pause in investigations was not a signal HMRC were no longer interested, the recommencement does not mean there will be capitulation.
However, there are opportunities to refresh matters and break an impasse that may have been forming.
Is reaching a settlement still possible?
Jim Harra, the Chief Executive of HMRC, told a committee of MPs that he expected the Government support measures to be targeted by fraudsters.
HMRC will need to police the support system both during its operation and afterwards. This will consume resources and Inspector’s time.
In the short to medium term, an individual Inspector is likely to be more open-minded to achieving a settlement, it’s one less matter to deal with.
So whilst HMRC’s working practices are changing and they will always be revenue hungry, in the short to medium term, it may be possible to reach a more palatable settlement than was previously thought possible.