Minutes of meeting of Working Together Steering Group (WTSG)

11 June 2008

HM Revenue & Customs, 100 Parliament Street

Chair: Brian Redford (HMRC)

Agent Representatives – shown collectively as the Working Together Professional Group (WTPG) in these minutes

Name	Organisation
Mike Belfourd (MB)	ICAS
Jean Jesty (JJ)	ATT
Richard Mannion (RM)	CIOT
Brian Palmer (BP)	AAT
Richard Shooter (RS)	ICAEW
Peter Jennings (PJ)	ACCA
Elizabeth Parks (EAP)	Independent Administrator for Working Together Steering Group (WTPG)

 

HMRC Representatives

Name	Organisation
Brian Redford (BR)	Business Customer Unit
Stephen Banyard (SB)	Business Customer Unit
Melanie Dawes (MD) – from 12.30 pm	Acting Director General
Tim Salt (TS)	Business Customer Unit
Jacqueline Stewart (JS)	Business Customer Unit
Mark Leech (ML)	Central Compliance
Brian Major (BM)	PAYE, SA & NIC SA Process
Allan McVittie (AMc)	PAYE, SA & NIC SA Process
Ray Bourley (RB)	PAYE, SA & NIC CIS

1. Welcome, introduction and apologies

1.1 Apologies were received from Derek Allen.

2. Minutes of previous meeting and matters arising

2.1 Minutes of the last meeting were formally agreed.

2.2 There was a brief discussion about procedures around signing off and publishing the minutes. It was confirmed that minutes should not be published on the internet until they had been agreed by all sides. It was agreed that draft minutes will be issued to the agent reps within two weeks of the meeting and that they will provide a response and comments within two weeks of receipt. The aim should be to publish the minutes as soon as possible after they have been signed off by correspondence.

Action points from last meeting

2.3 It was agreed that action points would be dealt with on an exception basis in the meeting and would otherwise be progressed on an ongoing basis and updated as appropriate.

2.4 Action point 1: Shared Workspace: Madeline McGrillen had provided training on Shared Workspace to the agent representatives, which had been greatly appreciated. A number of agents had now used Shared Workspace and BR urged the remainder to do likewise – particularly as the issues register provided very useful information about the issues that are currently being handled and filter technology that enabled partners to identify similar issues. In addition Shared Workspace provides a secure means of transferring sensitive information. Anyone needing further help to access or use Shared Workspace could contact Madeline who will be able to provide any support that is required. As robustness of use improved it was hoped that SWS would become the repository for all WTSG working papers and the ideal environment for secure discussion.

2.5 Compliance Reform Forum (CRF): It was recognised that WTPG would like to be kept informed of development and progress of issues within CRF and whilst minutes of the group are accessible from the Internet it was acknowledged that there can be a delay between CRF agreeing them and publication. It was agreed therefore that minutes will be forwarded to WTPG as soon as possible after they have been agreed by CRF. Similarly WTPG would appreciate sight of the CRF agenda before a meeting takes place. A discussion took place about members of WTPG liaising with their opposite numbers on CRF but it was agreed that copies of the agenda would be provided and that it would be up to the WTPG members to agree with their reps how any further input is handled. Action: JS to arrange for CRF minutes and agendas to be forwarded to EAP.

2.6 WTPG enquired if the group could have a representative on CRF. Derek Allen, a member of WTPG, already attends CRF representing ICAS and the other rep bodies have representatives on CRF – it would therefore be necessary for members of WTPG to agree representation on CRF with their own institutes. Action: JS to provide details of current representatives on CRF to WTPG.

2.7 Action point 6: ESC A19 - Meeting took place on 16 April 2008 with internal and external stakeholders, including John Kimmer. HMRC have agreed to an internal review of ESC A19 practice and processes and an HMRC workshop has been planned for 2 July 2008 after which external stakeholders will be contacted. This can be included in a future WTPG as the review process takes place.

2.8 Action point 8: Contact Centres – Provisional date of 11 July has been agreed for the WTPG to visit the Agent Dedicated Line in East Kilbride and will also cover the employer help line.

3. WT Regional Workshops

3.1 A discussion paper had been circulated in advance of the meeting that set out some high level proposals to hold a series of regional conferences for HMRC staff and agents involved in local WT during September 2008.

3.2 The background to the events is organisational change in HMRC, recognition of the valuable role local WT plays and the need to invest in local groups to ensure a consistent approach. The regional workshops are not planned as a replacement for local WT but it will be important to discuss how we go forward following the events. For them to be a success it’s important that they are jointly owned – HMRC and agents through the WTPG.

3.4 WTPG very supportive of the idea and remarked that it was a suggestion they had made some years ago. They are very keen to be involved in the planning and delivery of the events – especially as it provides an opportunity to support the groups that may currently be struggling.

3.5 A discussion took place around the format of the events, consideration of timings and travel arrangements for people travelling to venues and it was agreed that arrangements should be made for an early teleconference with BR, TS and the members of WTPG nominated to work on the planning. Action: TS to liaise with EAP to get nominations and arrange a date for a teleconference.

4. New powers and penalties – Mark Leech

4.1 Context for this is behavioural change – for customers, agents and HMRC – applying the same rules across tax regimes and coming down hard on the deliberately non-compliant. Where mistakes have been made but reasonable care has been taken there will be no penalty. Where reasonable care has not been taken but a full disclosure has been made without fear of discovery, a penalty could be reduced to nil.

4.2 WTPG was broadly aware of the new penalties but concerned about the definition and use of ‘reasonable care’. ML explained that it’s essential to look at the circumstances and abilities of the person – from the average person in the street to a multi-national – to determine what is reasonable in their specific circumstances and HMRC staff will have to apply the test on a case by case basis. It’s a major challenge for HMRC staff and represents the main thrust of his work.

4.3 WTPG pointed out that agents can make mistakes. ML confirmed that when an agent acts there is still an onus on the individual but again it is necessary to look at the particular circumstances. For example at the very least there is an expectation that a customer should keep records and an onus on that person to take reasonable care to avoid inaccuracies by the agent. What is reasonable for the client to have known and how significant the omission is in relation to the overall tax liability will need to be taken into consideration – but HMRC is not expecting perfection.

4.4 Operational Guidance is being developed based on feedback from agents collected through consultation and from speaking events at groups and stakeholder events. As a result FAQs are being developed for the website, an e-learning package is available through the website and consistently the same message is being given to HMRC staff and external stakeholders.

4.5 As the new penalties start to be applied HMRC will increase guidance including joint work with agents and HMRC staff. As part of the development of effective engagement with agents HMRC is keen to look for opportunities for joint training. WTPG concurred with this view and as an example used the joint enquiry workshops that Working Together developed and rolled out a few years ago. HMRC remains open minded about the best way to do that whether through local WT, joint CPD, regional events or by using the Carter Online Services workshop model. WTPG agreed with the aims but sounded a note of caution that if HMRC focussed on the representative bodies (through Working Together) and work too closely this may disadvantage the unrepresented or people who are members of the smaller institutes.

4.6 Whilst communicating and consulting on the changes is part of ML’s remit he is also responsible for implementation and roll out and he confirmed that he will be working with the Powers team to ensure consistency. Work is currently looking at internal review procedures for disputes and is working closely with the Tribunals Reform team to ensure we have a consistent approach with individual reviews - avoiding the need for cases to go to tribunal wherever possible.

4.7 In answer to a question from the WTPG, ML confirmed that while HMRC is unable to apply the new test of reasonable care on penalty cases before the legislation becomes effective, feedback suggests that staff are thinking about current cases in more depth as a result of new understanding.

Action: ML to provide an e-version of his PowerPoint slides.

5. Technical issues for discussion

5.1 Papers had been issued to WTPG in advance of the meeting setting out the technical issues for discussion and what was being asked of WTPG. The aim was to steer away from lengthy presentations and provide the WTPG with a clear idea of the issues HMRC wanted their help in resolving and would not simply be an update of decisions already taken. This should also give the WTPG an opportunity to consult more widely in advance of the meeting if they wished to do so. The business specialist submitting the paper will attend the meeting to answer the partners’ questions and to take feedback – not to provide a presentation. The partners welcomed this approach.

5.2 Self Assessment refinement: Foreign untaxed interest: BM explained that the proposal is to amend the Self Assessment guidelines to allow the £2,500 limit for UK untaxed interest to apply to any untaxed interest from banks, building societies and other deposit takers irrespective of whether it comes from a UK or foreign source. So in future as long as a customer had (in total) less than £2,500 untaxed interest this alone would not be a reason to complete a return.

5.3 Similarly, if the taxpayer is in Self Assessment for other reasons they would be able to use the Short Tax Return (if they would otherwise qualify) using the untaxed interest box, or the core return using the UK untaxed interest box, to prevent them from having to complete the foreign supplementary page. The outcome would be that a person could have foreign dividends of £300 or less and untaxed interest (whether foreign or UK) of less than £2,500 and not need to complete a return (if they had no other reason to do so).

5.4 The meeting discussed the proposal in some detail and whilst generally supportive of the proposal the following points were made:

1. Need to be clear about what the changes are seeking to address and communicate it clearly.
2. There are Non Doms issues to address as many will overlap with new rules for remittance basis. If they don’t complete the foreign pages how will HMRC know who they are – which could create a compliance problem.

5.5 BM said that changes to the tax return should make it clear but agreed that good communication is needed. Reducing to £2,000 to align with non dom requirements may make it clearer and an easier message to deal with – he would take the feedback on board and do some more work on the proposal.

5.6 Clients Account Information Sheets (SA327): AMc provided a brief overview of the proposal. HMRC has received feedback that some agents find the SA327 of little value. In view of this and because HMRC believe the Self Assessment Online View Account provides agents with a better view of their clients accounting information it proposes to cease the issue of SA327s following the issue in June. Savings of around £9.1 million per annum would be achieved by doing so.

5.7 WTPG said that its previous stance on this issue was that they should go out but accepted that with increased take up of online filing this was less of an issue. There are also admin burdens issues with agents having to look at a paper output that for many was unnecessary. However there were some advantages – it is not possible to view all clients on-screen and for some the benefit is in having the payslip. The consensus of the WTPG was that while it understood the reason for withdrawal they thought this should be on an ‘opt in’ basis.

WTPG suggested that if it were possible for agents to download printed payslips from agents’ online client data, then this would go a large way to remove the benefit of the paper forms.

5.8 AMc explained that an ‘opt in’ still presents problems and won’t achieve the savings as it still requires a full scan of the entire system with associated downtime. There was a suggestion from SB that a business case could be written which showed the savings achieved by withdrawing the paper output being reinvested into other Self Assessment changes linked to Carter. This could then be communicated to agents as a net improvement in provision of services to agents. It was left that AMc would do more work on the proposition.

5.9 Acknowledgment of Cleanly Captured Return (SA310): AMc explained that a Notice of Clean Capture (SA310) is issued to the agent after a paper return is captured where the self calculation is correct. In effect this acknowledges receipt and processing of the paper return by HMRC. However the View Self Assessment Account Online facility shows when a return is issued, logged and captured so the proposal is to cease the issue of Notices of Clean Capture as soon as possible.

5.10 WTPG said they were unable to agree the proposal – this would disadvantage non e-enabled agent filers and also may result in additional contact from those agents who contact HMRC to check that the return has been received and processed. They suggested that this could be reconsidered in the future when more agents are e-enabled and when earlier years returns can be filed online – perhaps post April 2009. AMc thanked the group for their input and said he would keep them informed.

5.11 CIS - Partners issues: WTPG made it clear that asking RB to attend this meeting didn’t in any way seek to supplant the CIS forum but the group had concerns about a number of operational issues on CIS – particularly compliance reviews and withdrawal of gross status.

5.12 RB explained that new CIS had been developed in consultation with the industry and rep bodies. There had been a shared expectation that there would be a significant percentage of people who shouldn’t have been given gross payment status under the old scheme who would lose it as a result of more objective compliance checks. There is currently a 30 per cent failure rate in the first years compliance reviews, although early indications do not suggest that this is resulting in subcontactors ceasing in business. Representations from ICAEW and ACCA had been taken to ministers but they have declined to relax the compliance test. HMRC have indicated to ICAEW/ACCA that further evidence of the impact of policy outcomes on the CIS group would be needed before any reconsideration of the policy could be undertaken.

5.13 WTPG said they appreciated the need for better compliance but felt that it was wrong that there should be a higher expectation of compliance for the construction industry than for other sectors. RB said that this was a policy supported by governments for more than 30 years in view of the unique compliance challenges of the sector. WTPG argued that this customer group is at the front of a recession and the problem about getting evidence in order for ministers to react is that businesses are in danger of failing now and change could take too much time. They argued that this is fast becoming a very serious problem which has the potential to affect the profitability and financial well being of the UK.

5.14 RB said that he was confident that the compliance reviews are happening as they should do and tolerances are applied as written into the legislation. All businesses are treated the same regardless of size. Local offices have some discretion to override the compliance review if there is reasonable excuse for the failures and as the scheme has developed guidance to staff has been updated. WTPG said this was not the experience of the many agents who contact them and they were concerned about the disproportionate impacts on CIS customers. RB said that HMRC were keeping the position under review but were constrained by ministers’ recent decisions. Further and better evidence would be needed to reopen the issue with ministers.

5.15 On the issue of HMRC’s decision to refuse bulk requests for subcontractor payment details, WTPG said that being able to access this information online could improve compliance and reduce contact with HMRC. BP said that he would take this issue to the e-sub group. RB said that where an agent can show that they have attempted to get this information from other sources, eg the contractor, HMRC will still provide it. The decision to refuse requests is aimed at agents who make bulk requests for information. BP said that he was happy to endorse that message through the WT publication.

6 Forum with Melanie Dawes

6.1 WTPG asked for updates, which were provided as follows:

1. Agent Dedicated Lines rollout – early technical problems delayed the rollout but it’s now planned to complete this by autumn 2008. WTPG said that they thought this was a good news story which could be communicated more forcefully and they would help in getting the message out if they could be provided with a suitable brief that they can use in their own publications/communications. Action: TS to provide EAP with a suitable briefing on the ADL rollout for the agents to use. Action: WTPG to look for opportunities to publicise the ADL rollout using the briefing provided.
2. Agent Account Managers/Customer Relations Managers – Evaluation has shown that agents with access to an AAM have appreciated the services provided. Most contact with AAMs has been to remove blockages and not to provide technical support. The AAM pilot is due to finish in September but may be extended to collect further evidence of the problems that agents encounter. As a result HMRC will be in a better position to address the irritants and blockages identified through AAM contact. WTPG said that the visit to Portsmouth had highlighted similar issues for agents and new ways of communicating messages about improving service standards and access to agents needs to be found.
3. 64-8 – Since the visit to Longbenton a great deal of work has taken place. In addition to publicising the visit and the early outcomes in the WT publication and on the Internet pages, an internal review has been taking place to understand the process and the issues for HMRC. HMRC felt it needed to do this before it could involve agents in the more detailed work. However a detailed paper will be finalised shortly and shared with WTPG. WTPG said that they had offered to support this work and feel that they have been kept in the dark about progress.
4. Aspect enquiries – use of attachments – RM reiterated the WTPG understanding that in the case of previously submitted paper returns HMRC could not guarantee review of attachments or white space ahead of the issue of an enquiry. Colleagues in HMRC had reviewed such entries in a sample of cases and in the light of their research had decided that the risk of duplication of queries could be managed with agents’ understanding. However, with the move to filing attachments electronically and the availability of white space entries for HMRC review, WTPG queried whether this policy was still valid. It was agreed that this raised a very valuable point that should be addressed and HMRC agreed to take forward with colleagues on the risk policy side. Members of the Carter Steering Group will be visiting a Local Compliance Risk and Intelligence Service (RIS) team shortly to understand the work carried on in this part of the HMRC operation.
5. Repayments – WTPG expressed concern that in repayment cases there is often a discrepancy between the date of repayment shown on the client statement and the date payment is actually made. Action: TS to investigate and report back.

6.2 Strategic engagement with agents – MD said that HMRC appreciates the value in consulting and engaging with agents in order to understand where there are problems and as a way of helping the department to design and deliver changes. The paper that was circulated in advance of the meeting addresses how HMRC and agents can do that in a more strategic way.

6.3 WTPG said that whilst there were some good aspects to the paper that they did not feel that they had been given sufficient time to consider it fully and provide a considered response. BR said that the paper had been shared with the professional bodies in May and he had expected that they may have communicated this further. However it will be discussed at the next Tax Agents and Advisers steering group meeting in September and he wanted to provide early sight of it to the WTPG. TAASG members had been asked for feedback by end July.

BR accepted fully that they would want to consider the paper in more detail and this is something that can be picked up at the next meeting. BR suggested that the partners may want to discuss it in advance of that meeting and he agreed their request to provide conference call facilities – both to enable the WTPG to discuss as a group and for them to discuss with HMRC and agree how to take forward. Action: BR to provide conference call details to EAP.

7. AOB

7.1 PJ raised concern about delays in communication on Manninen Cases – European Court decision on foreign tax credits. BM was unaware of any specific communication problems but outlined the changes that came into force in April 2008 putting foreign dividends on the same playing field as UK dividends. The same tax treatment would apply to foreign dividends unless the shareholding in the overseas company exceeds 10 per cent. There will be further changes made in April 2009 which policy colleagues are currently working on.

7.2 BP was concerned about the late notice for the stakeholders meeting taking place in Parliament Street on 12 June. If HMRC wants people to attend it needs to provide more notice. The date of the next Top 100 key stakeholder event would be circulated to WTPG more quickly in future. Action: TS to investigate and feedback.

7.3 JJ confirmed that she will be the WTPG representative for the next publication editorial board.

Next meeting 3 September 2008