We were appalled by the move – which was made without consultation - and we have been working closely with eight other professional bodies (the Institute of Chartered Accountants in England and Wales, the Institute of Chartered Accountants of Scotland, the Institute of Chartered Accountants in Ireland, The Association of Chartered Certified Accountants, The Association of Taxation Technicians, the Association of Accounting Technicians and the Society of Trust and Estate Practitioners and the Low Incomes Tax Reform Group) on the issue.

We met with the other bodies in early April and we agreed to work largely behind the scenes because we believe that this will give us the best chance of achieving the result that we all want. We have since met jointly with officials of H M Revenue & Customs and H M Treasury to put forward our views.

After the meeting a letter was written to HMRC on behalf of the nine bodies to reiterate the points made in the meeting. It said:

At the meeting, we explained the very serious concerns that we have for unrepresented taxpayers, represented taxpayers and for our members, all of whom will, we believe face increases in compliance costs. We also explained the additional costs that we believe any change would involve for H M Revenue & Customs arising from manual interventions to correct the increased number of errors which the proposed changes would be bound to generate. The changes would have a serious impact on many people’s lives.

As agreed, we will now set out our views in detail by way of response to the partial regulatory impact assessment issued on Budget Day. It is our intention to respond in two stages. The first will be a joint response on the deadlines issue, which we believe is so important that it must be dealt with separately from and in advance of any response on the other recommendations in Lord Carter’s report.

We will respond on Lord Carter’s remaining recommendations separately but would say at this stage that we welcome the inclusion of what we may perhaps call the “Carter Principle” that “each of the services should be capacity tested at least a year before [the] recommendations are implemented and if any of the tests are not successful the measures relating to that service should be deferred”.

HMRC responded inter alia:

We discussed the strong concerns you have about the proposal to advance the 31 January SA deadline for online filing, which you said you believed would lead to increases in compliance costs. The Partial Regulatory Impact Assessment issued with the Budget specifically asks for views on the practicalities of introducing the changes. As discussed, we look forward to seeing the response to this that you mention in your letter. It will be particularly helpful to have evidence of the impact on compliance costs and an analysis of the factors that lie behind this impact.

The full text of the letters can be found attached below.

Professional bodies' letter of 28 April 2006

HMRC letter of 10 May 2006

Since the meeting we have been assembling evidence – largely from letters and emails sent to the nine bodies by members - into a formal response to the Partial RIA. We need more detailed evidence on some specific points and in order to obtain that evidence we need your help. A web based survey will be launched early this week and as soon as it is, we will let you know how to access it. The information you give us will be collated and used to further strengthen the RIA response.

As soon as the response is complete we will seek a further meeting with HMRC and Treasury officials to present them with our evidence.

The nine bodies will report separately on the other aspects of Lord Carter’s report.

We are also considering our response to the other measures in the report but it should be noted that a number of key things we and other professional bodies asked for in our submissions to Lord Carter last year have been included in his recommendations:

• The need to ensure that systems are properly and thoroughly tested before they are launched
  
• The need for systems to have adequate capacity
  
• The ability to attach computations and schedules electronically to e-filed returns
  
• An enquiry window linked to the date a return is actually filed rather than the statutory filing date
  
• More consultation between HMRC and stakeholders
  
• Agent workshops

We believe that Working Together through its e-subgroup will play a vital role in monitoring the implementation of the new measures and ensuring that the Carter Principle, that “each of the services should be capacity tested at least a year before [the] recommendations are implemented and if any of the tests are not successful the measures relating to that service should be deferred” is adhered to.

We plan to release the joint response to the RIA as soon as we have added the information from the survey.

We will of course keep you informed of developments.

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