HMRC is to adopt a new approach to streamlining enquiries for SMEs, called the Single Compliance Process (SCP), following a successful trial of the new framework earlier this year say Harris & Co chartered accountants Northampton as part of their accounting services to small bsuinesses.
HMRC describes the SCP as a single framework within which the majority of future SME business compliance checks will be undertaken, catering for both single tax and cross-tax enquiries. The framework is designed to concentrate solely on the risks or behaviours and is expected to reduce the compliance burden for SMEs and their agents.
SCP uses three different approaches. The first is desk based, for cases that can be worked either by correspondence or over the telephone. Then there are either one or two day visits, to provide a simplified and faster route for those cases where a face to face visit is required. The third strand is designed to address those cases showing characteristics requiring evasion approaches from the outset such as surveillance or unannounced visits.
HMRC says its trial of the new approach, which concluded on 31 March 2013, showed that direct tax enquiries were concluded more quickly, while the new process did not slow down the current process of conducting VAT visits and gave scope for further improvements by working some cases via telephone and/or written correspondence. The majority (86%) of companies involved were ‘extremely positive’ about their experience, while 63% of agents reported a ‘more positive’ experience under SCP.
As a result, the new collaborative working approach will now be used as the preferred method for dealing with SME tax enquiries. HMRC staff will begin by speaking to the company or agent at the start of the compliance check. There will also be an increase in requests for early meetings, and a drive to undertake records reviews at the same time for income tax and corporation tax customers.
HMRC says key elements in SCP are emphasising the principles of openness and early dialogue through early discussions around the risks identified and the information/documents required; developing a working relationship with the agent or customer at every stage of the enquiry; and conducting on-site review of business records, including use of sampling techniques.
The department says this approach should reduce the time taken to complete enquiries, while ensuring that the intensity of the enquiry is proportionate to the risks identified, by concentrating efforts on identifying the rule breakers and potential rule breakers. It also expects to see improvements in the quality and consistency of enquiry work across SMEs.