In a recent newsletter article we highlighted extracts from HMRC’s “Your Charter”: this sets out a taxpayer’s rights and obligations in their dealings with HMRC. In a nut shell they are:
Your rights – What you can expect from us:
1. Respect you
2. Help and support you to get things right
3. Treat you as honest
4. Treat you even-handedly
5. Be professional and act with integrity
6. Tackle people who deliberately break the rules and challenge those who bend the rules
7. Protect your information and respect your privacy
8. Accept that someone else can represent you
9. Do all we can to keep the cost of dealing with us as low as possible?
Your obligations – What we expect from you:
1. Be honest
2. Respect our staff
3. Take care to get things right.
As advisors we are automatically drawn into this arrangement. As such, it is worth considering the word “honest” in this context. Presumably, it alludes to compliance with the law?
We are all aware of tax law we know and also legislation that we have some knowledge or very little knowledge, but we know that the issue exists and clients may need advice on the topic at some future date. What we don’t know is the liabilities our clients may face if we are blissfully unaware that a particular law or regulation exists. It’s every advisor’s worst nightmare. The doctrine that ignorance of the law is not a valid excuse for non-compliance with the law is firmly bedded into our legal system so clearly, it is no excuse to use lack of knowledge as a defence.
According to the Adam Smith Institute the UK has one of the largest tax codes in the world. For example it is reputed to be five times larger than the German tax code. In order to cope with this fiscal monolith the HMRC and professional advisors are being encouraged to specialise; which is fine for larger firms but what about sole practitioners and smaller partnerships and indeed tax payers attempting to sort out their own affairs?
The present trend to counter complex tax avoidance schemes is only making the matter worse: extending the code. Major efforts to simplify tax legislation, the merging of National Insurance and Income Tax for example, are likely to be side-lined due to lack of research and drafting funding.
Which leaves the tax payer and his advisor in an unenviable position: whilst we can take care to try and get things right, the growing complexity of our tax laws will likely outpace our ability to do so. What we need is simplification of our tax code in order that – what we don’t know that we don’t know – reduces rather than increases…
Add your own ideas for simplifying UK tax to this blog or links to other material that you feel may interest colleagues. Perhaps it’s time to add our voice to the internet chatter on this topic.