Following a recent appearance by some senior HMRC personnel at the Public Accounts Committee, HMRC sent the following update.

“We wanted to update you on work underway at HM Revenue and Customs to improve performance and prioritise change, some of which was mentioned at yesterday’s Public Accounts Committee hearing on HMRC’s performance. It is important to note that while HMRC is focused on supporting work to deliver EU Exit we are continuing to deliver more for less on other vital projects and the numbers back this up. We’ve produced some brilliant results by securing £605.8 billion in tax revenues during 2017–18 – an increase of 5.4 percent on last year.

Achievements

We have secured a phenomenal £30.3 billion from policing the rules, meaning resources for our public services that would have been lost had we not intervened. This translates directly into funding for hospitals, schools and other essential public services.

HMRC has a vital purpose: we collect the money that pays for the UK’s public services and help families and individuals with targeted financial support. We help the honest majority to get their tax right and make it hard for the dishonest minority to cheat the system.

Compliance means paying the right tax at the right time in line with the tax rules. It’s unfair for individuals or businesses to try to get round paying their fair share. HMRC has an outstanding record of supporting those facing genuine difficulty but who want to do the right thing. We treat all taxpayers impartially and it’s our job to ensure that everyone pays what is due under tax law.

The committee examined the following areas:

VAT Fraud

The UK has been at the front of international efforts against VAT evaded by overseas sellers – in part by introducing a joint and several liability. As of June 2018, seven online marketplaces had signed up to our Agreement paper which requires the expulsion of sellers without a VAT number. Since 2016 HMRC has received around 43,500 applications to register for VAT by online non-EU-based businesses.

Business benefits

HMRC will continue to deliver a modern digital service for businesses at the same time as helping them to get their tax right from the outset and any costs incurred are likely to qualify for full tax relief. We have a pivotal role in supporting EU exit – delivering essential programmes that will support access to European markets and boost free trade with countries around the world.

EU Exit and Customs Declaration Service

We’ve always said the timeline for implementing the Customs Declaration Service (CDS) is tight, but that we would operate the current system, CHIEF, in tandem throughout the transition. We have made good progress on delivering the first phase of CDS already and on our contingency planning, to ensure that the UK has a customs system capable of handling any potential volume of customs declarations after March 2019.

Transformation

We have been open about our plans for Making Tax Digital; reprioritisation will not negatively impact on our tax collection. Costs incurred by businesses in going digital are likely to be tax deductible.

No Deal information

The UK government has reached agreement with the EU on the vast majority of withdrawal issues, including the terms of an implementation period. Full agreement on this will mean that trading with the EU during the implementation period will broadly stay the same from the end of March 2019 until 31 December 2020.

The government is also focused on securing a future partnership with the EU following the end of the implementation period in December 2020. The recent White Paper ‘The future relationship between the United Kingdom and EU’ set out details of this.

However, the government continues to prepare for all scenarios, including the unlikely outcome that the UK leaves the EU at the end of March 2019 without a deal.

Businesses should consider how a ‘no deal’ scenario could affect them, and might want to begin taking steps to mitigate against such a risk, however unlikely. HMRC’s technical notice provides further details to support early planning on customs and excise to help businesses understand the potential impacts.

A video of the Select Committee hearing is available to watch at parliamentlive.tv/Committees.”

END OF HMRC UPDATE