Introduction 1-2. Key point summary Comments Who we are. Ten Tenets for a Better Tax System

Transcription

1 INTRASTAT A submission made on 30 August 2007 by the Tax Faculty of the Institute of Chartered Accountants in England and Wales in response to a consultation paper issued on 27 June 2007 by HM Revenue & Customs CONTENTS Paragraph Introduction 1-2 Key point summary 3-11 Comments Annex Who we are Ten Tenets for a Better Tax System A B ICAEW Tax Faculty, Chartered Accountants Hall, PO Box 433, Moorgate Place, London EC2P 2BJ T +44 (0) F +44 (0) E tdtf@icaew.com 1 of 6

2 INTRASTAT INTRODUCTION 1. We are pleased to respond to the consultation paper issued by HM Revenue & Customs on 27 June 2007 regarding potential changes to, which can be found at nfpb=true&_pagelabel=pagelibrary_consultationdocuments&propertytype=docum ent&columns=1&id=hmce_prod1_ Details about the Tax Faculty and the Institute of Chartered Accountants in England and Wales are set out in Annex A and our Ten Tenets for a Better Tax System which we use as a benchmark is in Annex B. KEY POINT SUMMARY 3. Most businesses regard the reporting requirements as an unnecessary burden from which they gain no benefits. We believe that the requirements should be reduced to the absolute minimum required to meet the UK s obligations under EC law and that the UK should negotiate with the EC to reduce those requirements still further. Ideally, should be abolished altogether. 4. From the options given in the consultation document, we recommend the raising of the exemption threshold to the maximum possible extent in order to minimise the number of businesses required to submit returns. 5. It is generally more difficult for a business to identify arrivals than dispatches. Consequently, the removal of the requirement to report arrivals would be most welcome. If is not abolished, then we recommend that declarations be required for dispatches only and that they be provided on combined and EC Sales List forms. 6. We believe that for many practical purposes, the statistical information obtained from returns could be better obtained from the current boxes 8 and 9 on VAT returns. In theory, as these boxes should be completed by all businesses trading above the VAT registration threshold, they should provide a more accurate total of acquisitions and dispatches than the declarations, which are limited to businesses trading at much higher thresholds. 7. If is to continue, the methodology required to complete returns should be consistent with that required to complete boxes 8 and 9 of VAT returns. This would save some businesses having to prepare two sets of figures for the same transactions. 8. Some of the information currently required on returns can be difficult to obtain, especially when shipping or similar agents are used to arrange transportation of the goods. The amount of information required in respect of each movement of goods should be reduced to the absolute minimum. In particular, the requirements to report delivery terms, net mass and supplementary units should be removed. 2 of 6

3 9. We recommend that the nature of transaction code be simplified to merely indicate a positive or negative value. 10. Declarations on returns should be restricted to sales and purchases. The present requirement to include details of transfers to overseas branches or subcontractors creates considerable difficulties for businesses, as many accounting systems are unable to produce the information required for purposes in relation to transactions of this nature. In particular, details of goods sent or received for processing between different EU countries should cease to be required for purposes. 11. We recommend that penalties for failure to comply with requirements should be decriminalised., as such penalties are inappropriate for a failure to provide statistical information COMMENTS 12. HM Revenue & Customs are seeking views on possible changes to the reporting requirements. Their consultation paper suggests alternative options that are being considered. Whilst considering these options, we have also taken the opportunity to provide suggestions as to how the burden could be reduced still further. 13. There are several instances where the and VAT return declaration requirements are inconsistent. For example, businesses selling EU sourced excise goods which are transferred into bonded warehouses on first arrival into the UK are required to include the value of UK excise duty in box 9 of the VAT return, but exclude it from the return. Such inconsistencies should be removed. 14. The timing of the and VAT return declarations for such transactions are also inconsistent. Such differences regularly attract the unnecessary attention of visiting officers. We recommend that the declaration requirements should be consistent across all forms. 15. In the example at paragraph 13 above, we would suggest that the value of UK excise duty is excluded from box 9 of the VAT return and that the goods should be declared on both the and VAT return forms that include the date on which they arrive in the warehouse, regardless of how long they remain there. 16. Consideration should be given to amalgamating the dispatches and EC Sales List forms. This could be achieved by adding a section to the EC Sales List to show total sales to each other Member State analysed by commodity code. The total of this analysis could be reconciled against the total obtained from the existing part of the form. Such a change would completely remove the requirement to submit separate dispatch forms. If this were combined with the removal of the requirement to complete arrivals forms, the abolition of would be achieved. 17. Transfers of goods sent to sub-contractors for processing currently need to be recorded as dispatches for purposes. Such goods normally remain the property of the sender. Many accounting systems can only register transactions as a sale or purchase, so a complex process is needed to make ensure that the data is 3 of 6

4 captured for purposes, possibly in the form of a spreadsheet. Such difficulties would be eliminated if transfers to sub-contractors were removed from the requirements where the goods concerned have not been sold. Such goods are often returned to the UK after processing for subsequent sale to third parties, which may or may not form exports to customers in the EC or elsewhere. 18. Many accounting and data management systems do not identify all the transactions or information that need to be disclosed on returns, with the consequence that some manual intervention and reconciliation is required. This appears to the vast majority of businesses to be an unnecessary administrative burden. Any simplification of the data requirements would therefore be welcome. 19. There is a balance to be struck between entitling the state to get information which it needs and being able to enforce it. Failure to furnish an declaration, or to provide information requested by HMRC in connection with the administration of the system, is currently a criminal offence and can attract a fine up to 2,500. We understand that HMRC generally issue a caution to a person who is liable to such a penalty. In theory, a person found guilty can also face imprisonment of up to two years. We believe that such penalties are excessive and inappropriate for a failure to provide statistical information. We therefore recommend that penalties for the regime be decriminalised. NG 30/08/ of 6

5 ANNEX A WHO WE ARE 1. The Institute of Chartered Accountants in England & Wales is a professional body representing some 128,000 members. The Institute operates under a Royal Charter with an obligation to act in the public interest. It is regulated by the Department of Trade and Industry through the Accountancy Foundation. Its primary objectives are to educate and train Chartered Accountants, to maintain high standards for professional conduct among members, to provide services to its members and students, and to advance the theory and practice of accountancy (which includes taxation). 2. The Tax Faculty is the centre for excellence and an authoritative voice for the Institute on taxation matters. It is responsible for tax representations on behalf of the Institute as a whole and it also provides services to more than 11,000 Faculty members who pay an additional subscription. 3. Further information is available on the ICAEW website, and on the ICAEW Tax Faculty website at or telephone +44 (0) of 6

6 ANNEX B THE TAX FACULTY S TEN TENETS FOR A BETTER TAX SYSTEM The tax system should be: 1. Statutory: tax legislation should be enacted by statute and subject to proper democratic scrutiny by Parliament. 2. Certain: in virtually all circumstances the application of the tax rules should be certain. It should not normally be necessary for anyone to resort to the courts in order to resolve how the rules operate in relation to his or her tax affairs. 3. Simple: the tax rules should aim to be simple, understandable and clear in their objectives. 4. Easy to collect and to calculate: a person s tax liability should be easy to calculate and straightforward and cheap to collect. 5. Properly targeted: when anti-avoidance legislation is passed, due regard should be had to maintaining the simplicity and certainty of the tax system by targeting it to close specific loopholes. 6. Constant: Changes to the underlying rules should be kept to a minimum. There should be a justifiable economic and/or social basis for any change to the tax rules and this justification should be made public and the underlying policy made clear. 7. Subject to proper consultation: other than in exceptional circumstances, the Government should allow adequate time for both the drafting of tax legislation and full consultation on it. 8. Regularly reviewed: the tax rules should be subject to a regular public review to determine their continuing relevance and whether their original justification has been realised. If a tax rule is no longer relevant, then it should be repealed. 9. Fair and reasonable: the revenue authorities have a duty to exercise their powers reasonably. There should be a right of appeal to an independent tribunal against all their decisions. 10. Competitive: tax rules and rates should be framed so as to encourage investment, capital and trade in and with the UK. These are explained in more detail in our discussion document published in October 1999 as TAXGUIDE 4/99 - see 6 of 6