In its consultation document, HMRC explores data collection changes for potential taxpayer return pre-population. Additionally, it outlines possible reforms to obtain information from third parties under Sch 36, Finance Act 2008.

ICAEW’s Tax Faculty responded favorably, advocating increased tax return pre-population for enhanced accuracy and reduced taxpayer compliance burdens. Nonetheless, it emphasized the need for mechanisms to facilitate easy data verification and an amendment to uphold taxpayers’ legal responsibility for completeness and accuracy.

The Tax Faculty also backs the introduction of a universal tax identification number for all taxpayers, including businesses, individuals, and other entities. It highlights the limitations of using national insurance numbers, which are not accessible to all individuals subject to UK tax.

The Tax Faculty suggests that HMRC should first assess its current powers to obtain information from third parties before implementing additional reforms. It recommends issuing third party information notices only when other means of requesting information have proven unsuccessful.

Additionally, the Tax Faculty observed that HMRC case workers often request information from taxpayers and agents within a short 30-day period during compliance interventions.However, they do not handle the information with the same level of promptness, causing a sense of unfairness in the inquiry process. Suggesting a more collaborative approach by HMRC, the faculty believes this could lead to quicker resolution of inquiries, eliminating the necessity for resorting to third-party information notices.

Lastly, the Tax Faculty expressed criticism of the proposal to introduce additional complexity in the penalties regime by incorporating variability based on a taxpayer’s prior compliance behavior. Instead, it believes that the current regime could benefit from simplification.