HMRC Toolkits – Are they a good thing?

 In Tax

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Managing risk is one of the hot summer topics as we enter the season for professional indemnity insurance renewal. Identifying the risk is the first step to ensuring that risk is managed. In the complex world of tax it surely makes sense to employ tools provided by HMRC which address the many mistakes they see, the impact of which may result in penalties and loss of reputation.

Why not consider the relevant toolkit for you and see if it can provide guidance as part of your firm’s risk management of tax advice and compliance?

Six free toolkits to help agents avoid common errors when filing clients’ returns were published on 17th May 2010 by HM Revenue & Customs (HMRC).

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The toolkits, which concern 2009-10 returns, are downloadable from http://www.hmrc.gov.uk/agents/prereturn-support-agents.htm, and cover:

  • Capital Gains Tax for land and buildings
  • Marginal Small Companies’ relief
  • Private and Personal expenditure
  • Trust and Estates
  • Capital Gains Tax for Trusts and Estates (supplement)
  • Capital Allowances for plant and machinery

HMRC intend to publish a series of these toolkits to cover the areas of tax which they consider, based on their compliance activities, represent high risk of error for agents.

HMRC have worked closely with agents in practice and the accountancy and tax professional bodies in developing these toolkits, which were pilot tested by around 600 accountancy firms, tax practitioners and solicitors during the course of the last year. The toolkits attracted positive feedback from the firms involved, particularly in finding the toolkits useful for helping to identify potential errors and risk areas and for use as a training tool.

That is not to say that every agent involved in the pilot test saw benefits, some were concerned that they may raise costs. But those that used the toolkits found that in practice this was generally not the case.

The toolkits are entirely voluntary and do not have to be used. It is also worth noting that they represent HMRC’s views – the views of tax professionals may differ. But they do provide a very useful insight into the errors that HMRC commonly see and can only help as a tool for firms in ensuring that their processes are as robust as they can be. Their use can also provide evidence of reasonable care, although firms should note that they do not have to be used to demonstrate this and many firms will already have existing processes in this regard.

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