Administrative Burdens Advisory Board

Minutes of meeting on 5 May 2009

1.00 pm – 4.00 pm G16, Horse Guards Road

Advisory Board Attendees: Teresa Graham (TG), Andrew Hubbard (AH), Roger Southam (RS), Julie Kenny (JK), Francesca Lagerberg (FL), Simon Sweetman (SSw), John Whiting (JW), Martin Jones (MJ), Russel Griggs (RG), Karen Thomson (KT), Steve Sharrat (SS)

Apologies: Paul Aplin, Ian Dewar

HMRC/Treasury Attendees: Stephen Banyard (SBa), Melanie Dawes (MD), Simon Woodside (SW), Ian Stewart (IS), Mike Brown (MB), Denise Togher (DT), Tony Kelly (TK), Jenny Pescod (JP), Carolyn Parmeter (CP), Harry Macdonald (HM)

Apologies: Gordon Smith, James Wright, Katherine Green

Ipsos/MORI: John Higton (JH)

Secretariat: Sally Beggs (SBe), Paul Oakes (PO)

Welcome and introductions

  1. TG welcomed everyone to the second Board meeting of 2009. The minutes of the meeting on 20 January 2009 were agreed. The action points had been discharged, were in hand or were on the agenda.

Item 1: Budget 2009 update

  1. JP gave a high level overview of the key business measures introduced at Budget.
  2. TG asked if the Strategic Investment Fund (SIF) was similar to the existing loan scheme. JK thought that the SIF was aimed primarily at green initiatives. JP offered to provide the board with more details.

Action Point 1: JP to send more details on SIF to board members.

  1. . JW's view was that the Budget measures were a mixed bag from an admin burdens point of view'. JW added that the 50 per cent rate would apply to all trusts and there would be an increase in admin burdens in relation to the changes to ISAs. FL thought the measures supported some businesses but added that there was now another level of admin for those earning over £150k. TG asked how much the additional burden for the new 50 per cent rate was likely to be.

  2. JW asked about the overall admin burden increases as a result of all Budget measures and for honest and clear discussions to establish these costs. AH added that some of the measures were long term but that did mean companies had to begin planning now. SBe responded that there were 26 Impact Assessments published at Budget giving detailed analysis of expected costs and benefits across a range of different measures – and mentioned ‘Foreign Profits’ reform as a good example of HMRC/HMT working with business to minimise new burdens. She also reminded the Board that some measures (for example, changes to tax rates) involve transitional compliance costs but do not lead to new annual admin burdens as measured by the Standard Cost Model (SCM). AH asked that when HMRC introduce a new measure, albeit for very good reasons, they are more transparent about burdens and that they will work with business to minimise them.
  3. JW asked if it was possible to review some Impact Assessments after 12 months to assess their accuracy. SBe confirmed that HMRC review Impact Assessments through an annual Compliance Cost Review programme and publish the results alongside the HMRC’s Annual Report. Lessons learnt are reflected in internal guidance to drive improvements in the Impact Assessment process.

Action Point 2: Include Compliance Cost Reviews (CCR) as a future agenda item.

  1. IS updated the Board about the outcome of the Simplification review of Company Tax calculations announced at Budget.
  2. TG expressed her disappointment at the decision not to take forward either of the options. However, FL was not disappointed at the decision to drop options but hoped HMRC would continue to look for something better. FL did approve of the simplification review in general and thought it had been a useful process. JW was also disappointed at the decision but fully supports the continuing effort to simplify. TG hoped that HMRC would work proactively with BERR in implementing the EU changes and took any opportunities this opened up to simplify the tax requirements. She wanted to keep this issue on the ABAB agenda.
  3. SSw added that the three line account threshold is very important and helps those businesses that choose not to employ an agent. However, AH expressed his concern that HMRC, to aid scrutiny, intervene more frequently adding further burdens after the event.
  4. TG mentioned an article written by SSw on a new Turnover Tax initiative in South Africa and asked if it was something HMRC might consider. SSw added that the scheme operated in South Africa is voluntary. IS explained that due to EU VAT Directives it would be very difficult for HMRC to implement a scheme in the same way.
  5. TG welcomed the HMRC New Relationship document published at Budget and the good progress HMRC is making against the targets. She reminded the Board that they will be responding to the document in their first annual letter on HMRC’s performance. She asked for volunteers to help with the drafting.

Action Point 3: Invite David Tyrell (BERR) to a future meeting to update the Board on the progress of EU initiative to give Member States the option of introducing simplified accounting requirements for 'micro' companies.

Action Point 4: ABAB to formally respond to HMRC’s New Relationship paper through their first annual letter on HMRC’s performance.

Item 2: HMRC Business Plan 2009-10

  1. SB introduced the HMRC Business Plan for 2009-10 and explained that this was the first plan that brought together all HMRC activities in one plan.
  2. SS asked why there was no mention of carbon savings or energy reduction within HMRC, given that it was a Government priority. MJ complimented the report for being clear and precise, but questioned SB on why there were no references to LEAN or value added initiatives within HMRC. TG said she was aware of LEAN initiatives across HMRC and SB confirmed that it was present in the plan; however the terminology used by HMRC is different. PaceSetter is the HMRC initiative that encompasses all LEAN across the department. TG suggested that it would be beneficial for HMRC to conduct some PR to highlight this.

Item 3: Debt Management (DMB) and Admin Burdens

  1. HM gave an overview of the work of DMB.
  2. TG complimented the ‘Time to Pay’ scheme as an excellent way to help business in the current downturn. KT believes that HMRC have an excellent opportunity to improve the system so that employers can see in one place their debt. Karen also explained that monthly returns, rather than annual ones, are actually preferred by some in the business community.
  3. In response to the levels of spurious debt within HMRC RS talked about improving communication across the department and better recording of information on businesses. In particular some businesses are created that will never trade or employ staff and improved information from the outset would avoid automatic non-filing penalties being issued as a matter of course. AH voiced his concerns over spurious debt levels and believes that the withdrawal of various Extra Statutory Concessions, especially the ESC on equitable liability, will not help matters: although generally he felt HMRC was doing well in dealing with the debt issue.
  4. JK touched on the closure of HMRC offices and felt that responses now received from HMRC are at best varied: the accuracy of information depends on which office you speak to. Julie believes that HMRC now have an opportunity to consolidate the tax payment picture; and used VAT payments/repayments as a good example. SSw believed that debt management was not helped by an apparent HMRC policy to vote against IVA’s which also invariably lead to other creditors losing out on monies owed.
  5. TG expressed her concerns regarding the HMRC pilot of using private debt collectors. HMRC responded that they are aware of the issues with private debt collectors and emphasised that the current pilot exercise will allow them to evaluate the approach recommended by the NAO.

Item 4: Perception of intervention research – interim findings

  1. John Higton (JH) from Ipsos/MORI presented the findings of the perception of intervention research.
  2. SS queried whether a sample number of only 51 provided sufficient data to work with: the sample number was too small and believed that ‘mass’ feedback gave a much better picture of the real picture.
  3. MB reminded the Board that they had been one of the instigators of the research, and emphasised that the survey was qualitative research rather than a quantitative study (it is not meant to be a statistically significant customer satisfaction survey – HMRC is doing that elsewhere). These results are designed to provide information about areas where HMRC can improve in the way it conducts its audits and inspections. Mike went on to explain that the report is only in draft stage with the final document expected by the end of May. The report will be looking at the initial contact, the check itself and what happens post-check. There was also a general agreement that HMRC Case Workers do well in the ‘physical’ aspects of the intervention which is in part due to the compliance workshops being run by HMRC. He also emphasised that there was room for improvement at the beginning and conclusion stages of the intervention process.
  4. JK enforced MB’s points on the improvements resulting from successful interventions using her own experience of a recent R&D Credits check: believing that although her companies’ admin burdens are now slightly higher as a result of the intervention, the tax records are in better shape for the future. RS added that the interventions were generally handled well and that communications are now much better but warned that HMRC needed to be alive to how standard letters are perceived by the taxpayer. KT also praised HMRC for the work done so far on improving these letters.
  5. KT spoke about HMRC making direct contact with represented customers which is unhelpful for the agents and tax advisers representing them. AH agreed on this point by adding that agents were uncomfortable with direct contact especially in enquiry cases.
  6. MD spoke briefly about the wider compliance strategy. Naomi Ferguson had given a presentation on this at the July 2008 Board meeting and MD thought it would be useful for the Board to have a further update on this later in the year.

Action Point 5: Reducing burden of HMRC's compliance interventions for those that comply and want to comply remains a Board priority - a future agenda item to include this in the wider context of HMRC's overall compliance strategy.

Item 5: Future approach to administrative burden reduction/tax simplification

  1. SW spoke about HMRC’s future approach to reducing admin burdens and tax simplification. Simon explained that new ideas/targets would need to be introduced in 2011. He concluded by inviting the board to play an active role in this process.

AOB

  1. TG advised the board that SBe would be leaving her current role to work in CT&VAT, she thanked Sally for her efforts and contributions over the last two years. TG introduced and welcomed CP and TK who would be taking over from Sally.

Next meeting: Arranged for 15 September 2009 at 100 Parliament Street.