A discussion document seeking high-level views on the way HMRC currently applies penalties when taxpayers fail to meet their tax or entitlement obligations has been published. HMRC state they would like to produce a more targeted and proportionate regime that encourages compliance and makes greater use of HMRC’s digital capability. Comments on the discussion document should be made by 11 May 2015.

The document outlines HMRC’s approach to compliance on the basis of three principles as follows:-

• Promote – this is about ensuring taxpayers have the information they need to get their tax and entitlements right first time; that they clearly understand their obligations and risks they face through non-compliance; designing out careless errors; looking for risk; and giving active help to taxpayers to meet their obligations.
• Prevent is about exploiting HMRC’s digital channels and using what is known about taxpayers to identify risks as they arise and intervening to give taxpayers the opportunity to correct their mistakes (in registration or filing) when they transact with HMRC, and before HMRC make payments or repayments.
• Respond is about tailoring HMRC’s enforcement and compliance activities and interventions to address specific taxpayer behaviours and compliance risks. HMRC intends to use technology where possible to automate tasks and to support the successful investigation of non-compliant behaviours. Activities will be more personalised as a result of increased ability to analyse taxpayer information.