Working Together- Issue 4

 

Contents

Working Together comes of age

I am delighted to introduce the fourth edition of Working Together. Since I became Director of Local Services last November I have taken a keen interest in Working Together. This has included a number of meetings with representatives of the professional bodies who have joined with us to make the initiative a success. I have been extremely impressed with the time, commitment and enthusiasm given by the professions' representatives and I am very grateful for this.

The Inland Revenue Annual Report for the year ended 31 March 2000 cites Working Together as a prime example of customer support. The Report says “Working Together is about building on existing arrangements for consulting and liaising with tax practitioners, and making better use of the strong links already established between local offices and agents across the country. We want to use those contacts to help us identify problems which need to be addressed at a national level in order to make the tax system work better. We'll be using the scheme to pick up and run with problems the minute they are spotted.”

WT is also about making the way in which we operate easier and more efficient all round by improving the processes we use to work together. It is about the Revenue and agents working in partnership to develop mutual understanding and to try to see things from each other's perspective.

WT is a two-way street. Our own chartered tax adviser David Earle, the private sector tax specialist working with the Revenue team, will shortly be writing an article for the Revenue in-house magazine both to increase awareness of WT within the Revenue and to seek feedback on good practice and also where we can improve.

WT has now established itself as a way of doing business together. The Working Together Steering Committee has therefore agreed that WT should no longer be seen as an `initiative'. It is now mainstream business - part of our service delivery.

If you have an issue please do try and raise it locally either with the Revenue or one of the professional bodies. If it is difficult to make a contact or you think the issue may be important nationally, please do contact the WT team here (contact details are given at the end of this page).

Stephen Banyard
Director of Local Services

Local Liaison Arrangements

The Working Together project arose initially from the recognition that we are all working with a very complex tax system and inevitably from time to time things go wrong. We were aware that there were a number of meetings taking place around the country between local practitioners and their counterparts in the Revenue to discuss current problems. These had been very successful in building bridges and resolving local problems but there was no existing mechanism to resolve “national” problems.

In November 1999 the Working Together group set out to establish a system for reporting those problems to a central point where they could be recorded and allocated to the appropriate person within the Inland Revenue for attention as appropriate. Some 15 months down the line, well over 100 issues have been reported, and the system of Working Together publications (of which this is No 4) is now well established as a means of communicating the answers, whatever the outcome, to a large number of agents and officers within Inland Revenue.

So the national reporting system has been put in place and is working. However we see the local liaison meetings as the key stones for the future success of Working Together. Experience of local liaison meetings to date shows that it is possible to “make a difference”. Over the next year or so the Revenue are undergoing a programme of change, with groups of tax offices being clustered together into Area Management and this will be an important time for liaison to take place, so that any points of difficulty can receive swift attention. Local liaison with tax agents will be a specific responsibility of the new Area Directors.

Our objective is to ensure that local liaison meetings take place in all of the main centres throughout the country. If you would like to get involved with the liaison meetings (usually held 2 or 3 times a year), then please contact the WT Team or me at richard_mannion@solomonhare.co.uk. We will endeavour to put you in touch with an existing group in your area or assist you in starting up a new group.

Richard Mannion FCA FTII

Self Assessment: Increase in coding out limit

If an SA taxpayer pays tax through PAYE and the balancing amount due for a tax year is below a specified limit, we will, if possible, collect the amount through the tax code for the following year provided that

  • the Tax Return is sent in by 30 September following the end of the tax year and
  • the taxpayer has not specifically requested on the Return that the amount should not be coded out.

The specified limit for coding out has been £1000 since Self Assessment was introduced in 1996/97. For the year 2000/2001 and subsequent years, the limit will be raised to £2000.

Review of Income Tax Self Assessment (ITSA) Enquiries

The report of the research findings of this study were published in October 2000, and in the last edition of

`Working Together', we said that the Revenue would look in detail at its approach in a number of areas that were causing concern. Some of the concerns can only be addressed by changing ITSA legislation, and these include:

  • simplifying the procedures for closing an enquiry, and
  • allowing a contentious point to be litigated during an enquiry instead of waiting until all open points have been dealt with.

In addition to these legislative changes, we will also be thinking about four procedural areas highlighted in the report:

  • Opening letters, in particular their length,
  • Requests for private bank account details,
  • Requests for interviews at an early stage of the enquiry, and
  • `Faster Working'.

We have planned a two-part programme of work. The first part concentrates on current Revenue practice alongside our training, guidance and Codes of Practice. This will involve talking to groups of enquiry caseworkers and managers, reviewing a selection of enquiry cases, learning what we can from cases that have given rise to complaints, and looking again at the opening letters that have already been sent to us as part of Working Together. We will be identifying not only areas of good practice but also working methods to be avoided.

Although this work will concentrate on practice in connection with full enquiries, we will also be considering better ways to tackle aspect enquiries and minor errors on tax returns.

The second part of the plan is to look at effects on taxpayers and their representatives. So we will be talking to groups who represent agents and un-represented taxpayers to find out the impact on them of current Revenue practice, and to gain more information about how we can work better together to achieve an enquiry system that is fair to everyone involved.

David Earle, a tax specialist from outside the Revenue currently on secondment to the Working Together team, is working alongside us in this work programme. By the time this bulletin is published, this phase of the work should be well under way. We aim to complete the discussions and reviews by the end of March. Based on the outcomes, we expect to be in a position after Easter to consult formally with all concerned on recommendations about changing the approach to enquiry work.

New package for self employed starting up in business

Anyone starting up as self-employed must now register with the Inland Revenue within three months - starting from the last day of the month in which self-employment began. The relevant secondary legislation can be found in SI 0045 The Social Security (Contributions) (Amendment) Regulations 2001.

Registration will be treated as notification for income tax and Class 2 NICs purposes.

  • There is a Helpline for the newly self-employed which will take registrations over the phone and which can give other help and information about tax and NICs. The Helpline is 08459 15 45 15 and lines are open 7 days a week from 8 a.m. to 8 p.m.
  • A free introductory video, for people just thinking about self-employment, called Starting up in Business - cutting through the red tape is available from the Helpline
  • The intention is to make the self-employment registration process easier and this is explained in new leaflet P/SE/1 Thinking of working for yourself? which includes the CWF1 registration form.
  • There is now an option of telephone registration. When registering by telephone, exactly the same information will be required as for completing form CWF1.
  • Leaflet P/SE/1 is available from the Helpline for the newly self employed, from Inland Revenue Enquiry Centres, and on the Inland Revenue's website www.inlandrevenue.gov.uk/startingup
  • The registration will be backed up by a new £100 penalty if people fail to register on time without a reasonable excuse.
  • Anyone with earnings below the small earnings limit (currently £3,825 a year) must register, but they will not have to pay the new penalty if they register late.
  • Anyone who began self-employment in January 2001 or earlier and does not register by 30 April could incur the new penalty from 1 May.
  • We offer people who register our new Starting up in Business guide. It explains about tax, National Insurance, VAT, tax credits and the records that should be kept, in as plain a language as possible. It can be viewed on our website - www.inlandrevenue.gov.uk/startingup

Agents and registration

Agents can register on behalf of clients using the form CWF1 - or by phone - providing an appropriate form 64-8 is in force; or for a new client, if form 64-8 is sent with the form CWF1. Following registration, if desired, we will send the agent a copy of the guide for the client. But please note that the Helpline itself is unable to provide agents with bulk copies.

Remember that some old 64-8 forms do not cover NICs (see Working Together Issue 2) and may need to be updated. If you are unable to have a look at the new Starting up in Business guide on our Internet website, Working Together has arranged for agents to be able to obtain single sample copies by telephoning 0845 9000 404 mentioning this article in Working Together. You can also fax on 0845 9000 604.

Agents may wish to check that existing self-employed clients who earn less than the small earnings exception limit are formally registered and are either paying Class 2 National Insurance Contributions or hold a valid exception certificate. If they are not formally registered there is a risk that if their earnings increase over the exception limit they could incur the penalty.

Statement of Account: Unallocated Credits

As a general rule we allocate any unallocated tax credits to charges that are becoming due within 45 days. This process takes place shortly before a Statement on Account is issued so that the Statement reflects the overall position.

However this 45-day period is extended twice a year prior to the selection process for the June and December Statements. This is because we start the selection process earlier in those months so that your clients will receive their Statements in plenty of time for the due dates of 31 July and 31 January. For example, this year the selection process for the December statements commenced on the 8 December so the parameter was extended to 65 days. This ensured that the taxpayer statement reflected the true position of any payment required on 31 January.

This process does not affect the taxpayer's right to receive a repayment rather than having the overpayment set off against liabilities that are becoming due. If they want the repayment they should contact their Tax Office on receipt of the statement.

London Self Assessment Processing Work - A Tale Of Two Cities?

  • Well, City of London 1 and a Town, actually (but one with a football club recently promoted to the Premier League - does that count?)

“Euston, we have a problem” became our catchphrase for the project when we learned that 25,000 SA records were moving to Ipswich and we had six weeks before the eagle was to land.

During those weeks our main problems were to profile the new work we were to inherit, identify the main groups affected in our importing office, decide how to allocate the work between us and address matters of consistent procedures and continuity.

To say the least it was a period of frantic activity, and `liaison' was the keyword. We worked within a tightly controlled timetable which allowed periods for research, decision making and implementation of the agreements. Different groups visited Euston Tower to build a profile of their SA cases and other people spent time there working alongside City of London 1's (COL 1) processing staff. Meanwhile, regular cluster meetings in Suffolk enabled offices to air concerns and share local practices, and from these we shaped and agreed the common practices we now follow when dealing with our London work. These procedures were included in an informal `London Work Guide' which, thanks to IT was easily e-mailed to all staff involved.

We faced new areas of work - much larger partnerships than we were accustomed to where Agents often forwarded one large cheque to cover the different partners' liabilities. These are not always accompanied by a schedule detailing the breakdown and this causes difficulties and delays ensuring the correct amounts are allocated to the correct accounts.

Non Resident Partnerships and Limited Partnerships were completely new areas that had previously been the sole province of London offices and these presented a special challenge for us. We are still feeling our way, but as the London Technical Offices, COL2 and 3 and COL1 Collection retain involvement we have established sound links with them and value their response and advice.

The period after the transfer seemed unnecessarily stressful for the Agents and us alike. No advance information was sent to Agents but they learned of the move by receipt of a brief notification issued immediately after the transfer. This fell sadly short on communicating `what' was being transferred and our Phone Team was bombarded by callers who, in many cases, were angry about the move and often speculated on what they foresaw as a future of poor quality work and the impossibility of achieving any real customer service with 100 miles between us.

Our local Customer Service Group anticipated a surge of dissatisfaction and prepared information posters, which were displayed in some of the London IRECs, and an explanatory circular which was sent out to Agents in July. This included information about an Open Day to be held at Euston Tower in November 2000 that was arranged with the blessing of the London Institute of Chartered Accountants. At the event London and East Regions of Inland Revenue explained the reasons for the transfer of work out of London, and Agents met representatives from both offices and were invited to air their concerns. Further Open Days are possible.

Well, we've come a long way since we joined the Premier League, but if they think it's all over - it isn't yet! Historically City of London 1 receive the bulk of each year's Tax Returns in the few days leading to the 31 January deadline. So, in the next few weeks we face the most enormous processing task on top of the home Tax Returns we are accustomed to receiving!

Hopefully our local catchphrase won't become, “Ipswich, we have a problem”

It will be quite an experience. We hope Agents have formed sufficient opinion of the quality of our work to know that there is commitment from our staff to achieve the task efficiently and effectively. However, in turn we ask that Agents consider how they could plan a more even delivery of Tax Returns for future years so that we can all avoid what has become the `mountainous' peak of 31 January?!

Ipswich Area Office

Postscript

We would like to thank Ipswich Area Office for their contribution.

Our original intention was to start by moving work from South London in May/June 2000 and then move the remainder in three tranches over three years, the first tranche taking place at the end of December. However as staff wastage in London occurred at a far higher rate than originally anticipated, we decided to bring forward the movement of work from three large offices to coincide with the moves from South London.

Unfortunately communication was not as good as it could have been either internally or externally. We have however learned our lesson and are setting up a communications strategy to ensure this does not happen in future moves.

The future of SAT2

SAT 2, “Self Assessment: The Legal Framework” was issued free to tax practitioners in 1995. Many of you have asked us about the future of this publication.

We have no current plans to update and maintain SAT 2 but we are aware that many practitioners would like to see it updated and we are keeping the situation under review. The Press Release of 10 November 2000 said that the Government intended to bring forward various changes to the law on Self Assessment in the next Finance Bill. We do not think it would be sensible to republish now, but will consider doing so after the next Finance Act.

In the meantime, SAT 2 has not been withdrawn. And updated material is available in our manuals, e.g. the Self Assessment Manual and the Enquiry Handbook, which we publish on our Website www.inlandrevenue.gov.uk.

If you have any views on this, please get in touch with the Working Together Team. Contact details are at the bottom of the page.

Register of Issues

The current Register can be viewed on our Featured Area of the Revenue website www.inlandrevenue.gov.uk

Self Assessment Tax Return Guides (the `big books')

For 2000-2001 we'll be using the agent details held on the Self Assessment system for bulk mailing purposes and we'll be sending at least one copy of each of the `big books' to any agent with more than five clients on our database.

And this year, we'll track any supplementary orders you made last year so the initial supplies you get in March 2001 should match the total quantity you ordered last year.

Each pack will contain a re-order card. But we won't be doing another print run, so please only order sufficient Guides to meet your needs.

After 6 April 2001 you'll be able to view and download the forms, notes and help sheets from the Inland Revenue Self Assessment web page at www.inlandrevenue.gov.uk/sa.

Tax Calculation Guides for the 2000-2001 Tax Return

In April 2001 we'll be issuing a Tax Calculation Guide (SA151w) to all unrepresented individual SA taxpayers. But if taxpayers are professionally represented and receive a paper Return, we'll send them only the core Tax Return and any supplementary Pages. (And for represented Trusts and Partnerships we'll just issue core Returns.)

Represented taxpayers usually pass their Returns straight on to their agent. You've told us it's a waste of paper and other resources to send Tax Return Guides and Tax Calculation Guides to your clients because neither you nor they need them. But the Tax Return Guides (SA150, SA850 and SA950), notes to supplementary Pages and a Comprehensive Tax Calculation Guide (SA151c - which covers all types of income and gains and all types of allowances and reliefs) will be available from the SA Orderline.

Discretionary treatment for members' clubs etc. as dormant for CTSA

Members' clubs and similar organisations that exist primarily for recreational and other non-commercial purposes may be treated as dormant at the discretion of the Inspector even though they receive small amounts of investment income. This can apply to most clubs run for the benefit of their own members provided there are otherwise:

  • no taxable profits (apart from those trading profits covered by ESC/C4),
  • no allowable trading losses,
  • no payments made under deduction of tax
  • and no chargeable assets likely to be disposed of.

Subject to periodic review at least every 5 years, an annual CT600 return form will not normally be required under CTSA. If exceptionally the local Tax Office nonetheless requires a return then it must be completed.

Such a club would be expected to notify chargeability if:

  • the types and level of its income changed or
  • it had chargeable assets that were likely to be disposed of or
  • there were changes to its rules or constitution or
  • there were changes in the way its financial affairs were controlled.

If it is proposed to apply this treatment, the Inspector will write to the club to say so. If a club has not had such a letter, then the treatment does not apply. Clubs are free to raise this matter with local Tax Offices, if they believe that their situation may merit this treatment.

Guidance is set out in more detail in both the Inland Revenue COTAX manual (Assessing section/CT Pay and File Assessments/Members Clubs and Associations) as published under Open Government and the Guide to Corporation Tax Self Assessment. Both are available on the Inland Revenue website www.inlandrevenue.gov.uk.

Form 64-8 and details of output to Agents

We are currently revising the form 64-8. In the notes on the reverse of the form we intend to provide information to enable the agent to find details on the Inland Revenue website of the paper output they will receive following submission of the signed authority.

Details of the Self Assessment output are as follows:

  • Acknowledgement of cleanly captured Return where the Return included the calculation (SA310)
  • Statement of account (SA300) The client can ask the Inland Revenue to send the statement to the agent but this will mean that the client will not get a copy. Agents registered for filing via the Electronic Lodgement Service will receive electronic copies of their clients' statements.
  • Tax Calculation (SA302).
  • Revenue Determination (SA323)
  • Surcharge Notice (SA324)
  • Fixed penalty notices (SA326 and SA328)
  • List of client's transactions (SA327) In June and December each year agents receive details of all transactions on each client's account in the previous 6 months.

We plan to provide output details for other areas such as Corporation Tax in future editions of Working Together

PAYE Internet Service

From April 2000, Agents and Employers will be able to use the Inland Revenue's new Internet service to send in PAYE End of Year Returns.

The registration service has just opened. The Inland Revenue are encouraging employers and agents who plan to use the service for 2000-01 to register as soon as possible. This should ensure they have everything they need in time to send in end of year returns by the due date of 19th May.

The Inland Revenue are offering a one off discount of £50 to employers that use the Internet service to send in their 2000-2001 PAYE End of Year Returns and who make at least one electronic payment of tax for 2000-2001. Employers that qualify for the PAYE discount, and paid tax credits through their payroll in 2000-2001, will qualify for a further discount of £50.

The PAYE and tax credit discounts will also be available to those employers who use an agent, payroll bureau, or other intermediary, to send their 2000-2001 End of Year Return over the Internet. To qualify for the discount the employer will need to register on-line for the Internet service and notify us of their agent's unique Gateway Agent ID. The employer must also make at least one electronic payment of tax for 2000-2001.

Further information about the Internet services and discounts is available on the Inland Revenue's website.

Employer's Annual Mailing 2001

Employers and agents told us that, in trying to cover everything, the Annual Pack had become hard to handle. So the 2001 pack is different, and is less daunting. We've pruned the Pack, taking out what most employers don't use. But they can still get it, if they need it, from the Orderline. Then we redesigned what was left to make it easy to handle, clear where to start and obviously what to do next.

If you have any comments or suggestions about the pack, please contact us.

The 2001 Employer's Annual Pack contains:

A personalised letter
E1 `Start here… 'booklet
E2 `Main forms - snapshots' - illustrations of commonly used forms
E3 Order form - list of available Orderline items
E4 Fax order form
P9X (2001) Tax codes from 6 April 2001
CWG1 (2001) Employer's Help cards
CA38 (2001) National Insurance Tables Not contracted-out contributions Table A - (Note: CA41 (2001) Tables B & C available for employers to order from the Employer's Orderline).
CA35 (2001) Statutory Sick Pay Tables (Note: CA36 (2001) - SMP Tables are available from the Employer' Orderline
P14 (2001) sample (annotated)
P11 (2001) sample (annotated)

Where the Annual Pack is issued to an Agent, a copy of the Employer's Bulletin is sent direct to the employer

All employers who call the NESI (New Enterprise Support Initiative) Helpline (telephone number 0845 6070 143) before 5 April 2001 to have an employer record set up will automatically be issued with a New Employer Starter Pack, a 2001 Employer's Annual Pack containing copies of the Employer's Bulletin issue No 7 and the Employer's 2001 Planner.

Paper forms P9 (T) and Code lists will be issued separately from the Annual Pack and will include a copy of the P9X (2001). The main issue period is 26 February to 9 March (approximately).

The Employer's Orderline is open all year (excluding most Bank Holidays) and you can contact them by:

The Helpcard - `P17 (2001) - Employer's Orderline Guide' has been updated and contains information and details about the items available to employers for 2001.

The 2001 Employer's CD ROM will be available from early March 2001. It will be issued automatically to those employers who requested the 2000 version. It will contain most of the employer forms, leaflets and literature available from the Employer's Orderline.

Forms P11D (b)( 2001) - Return of expenses and benefits will be issued automatically in April to those employers who have previously reported details of benefits or employee expenses liable to Class 1A National Insurance contributions. New employers requiring duplicates/reissues can still order form P11D (b)( 2001) from the Employer's Orderline.

Area Management

In Working Together 3 we gave some information about Area Management which involves a phased reorganisation leading to our local offices being grouped into 60 or so management units or `Areas'. Areas will normally have an Area Director (Compliance) and an Area Director (Service Delivery). Most Area Directors have now been appointed and, depending on local circumstances, will take up duty between now and 2 April 2001.

Area Management is a major change to how we approach our work. As we said in our last edition, it is intended to enable us to:

  • move work freely to people with appropriate skills,
  • build a better understanding of our customers in an Area, and
  • make more efficient and effective use of our resources.

Between now and April 2001, Area Directors working with Regional Managers will also produce initial business designs for each area. These business designs will show where the different types of work such as telephone units, employer compliance, risk and research will be done. Central guidance will be available to ensure that all areas adopt a consistent approach but there will be some room for flexibility to reflect local customer needs.

So it will be important that our Area Directors take time to consider the best ways to develop their areas. Those areas not included in the formal phase 1 reorganisation programme will also be working under tight IT constraints that could inhibit moving work around. So 2001/2002 should be seen as a transitional year in which we are unlikely to see the full benefits of the reorganisation.

Post transaction valuation check process - the form CG34 procedure

We have completed a review of the post transaction valuation check service for capital gains purposes. We are grateful to the Association of Taxation Technicians for a paper on this subject that they submitted last year.

To improve the delivery of the service we propose to revise our internal guidance, in the Capital Gains Manual and elsewhere, as follows:

  • receipt of form CG34 is to be specifically acknowledged by the Tax Office
  • a copy of form CG34 should always be attached to the valuation request sent to the Valuer together with any additional information that is supplied to the Tax Office
  • to emphasise more strongly that priority attention is to be given at all stages in this procedure.

Our Approach to Helping People Manage Revenue Debts

In an earlier issue, we told you about the workshop we are arranging with Accountants' Representative Bodies to discuss and review our policies and practices. We plan to hold this on 27 April.

The workshop will focus on the feedback we have had and on the plans we have put together to take forward modernisation of Receivables Management including that part of the service (Voluntary Arrangements) to be joined up with Customs & Excise from 2 April 2001.

The workshop will include an overview on Revenue strategy and policy as well as our current plans. From your feedback and from research elsewhere we will work together to identify the hotspots, issues and suggestions for improvement. We intend to take from that workshop an agreed Action Plan which we will report back on at regular intervals.

In “Working Together” issue 3 we mentioned the new Revenue/Customs & Excise Voluntary Arrangements Service. We plan shortly to advertise more about the services this will offer and our new approach to commercial decision taking and a closer relationship with our customers and stakeholders. We will use the workshop as an opportunity to brief the Representative Bodies.

Editorial

Working Together is a joint initiative with the CIOT, ICAEW, ATT, ACCA and ICAS. Although the material in this publication obviously reflects discussion and consultation with these bodies, the Revenue is solely responsible for its contents and for the views expressed in it.

Contact details & back issues

Back issues can be downloaded from our featured area on the Revenue website www.inlandrevenue.gov.uk.

If you would prefer a paper copy, please write to or e-mail the address below.

Copyright

Working Together is covered by Crown Copyright. There is no objection to firms copying the publication for their own use. Anyone wishing to re-publish Working Together or extracts more widely, should write for permission to

Greig Rattray,
Working Together Team,
6N South West Wing,
Bush House,
London WC2B 4RD

or e-mail: Greig.Rattray@ir.gsi.gov.uk.

 

© Crown Copyright February 2001

 
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