Income Tax, Capital Gains Tax and Corporation Tax: voluntary tax returns
Published 29 October 2018
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Who is likely to be affected
Individuals, partnerships, trusts, and companies who have submitted tax returns voluntarily will have those returns put on a statutory basis.
General description of the measure
Historically HMRC Commissioners have exercised their discretionary collection and management powers to accept and treat Income and Corporation Tax Self Assessment returns received from customers voluntarily, on the same basis as tax returns received under a statutory notice to file.
This has been the case since the start of Self Assessment in 1996 to 1997 and is well accepted and adopted practice by both HMRC and its customers.
In the light of recent legal challenges to the practice and the validity of returns received voluntarily, legislation will be introduced with retrospective effect to put the practice onto a statutory basis.
This removes any doubt for HMRC taxpayers that voluntary tax returns have and will continue to be accepted as valid returns.
Policy objective
This measure will assure taxpayers who send in tax returns on a voluntary basis that they will be treated in the same way as if the tax return was requested under a statutory notice to file. This will provide certainty and finality for all returns received to date and going forward.
Background to the measure
The measure was announced at Budget 2018.
As the measure preserves the status quo, the vast majority of customers will not experience any change at all. A very small minority of tax avoiders will be affected.
Detailed proposal
Operative date
The measure has retrospective and prospective effect from the date of Royal Assent to Finance Bill 2018-19.
Current law
Current law relating to the making and delivery of tax returns for individuals, trusts and partnerships is contained within sections 8, 8A, 12AA Taxes Management Act 1970 and paragraph 3 Schedule 18 Finance Act 1998 for companies.
Proposed revisions
Legislation will be introduced in Finance Bill 2018 to 2019 with retrospective and prospective effect to put HMRCs longstanding practice of accepting voluntary tax returns onto a statutory basis.
These voluntary returns will be put on an equal footing with returns delivered under a formal notice to file.
Customers who have submitted voluntary returns will notice no difference in the treatment of their returns and there will be no doubt over their validity.
Summary of impacts
Exchequer impact (£m)
| 2018 to 2019 | 2019 to 2020 | 2020 to 2021 | 2021 to 2022 | 2022 to 2023 | 2023 to 2024 |
|---|---|---|---|---|---|
| nil | nil | nil | nil | nil | nil |
This measure supports the Exchequer in its commitment to protect revenue.
Economic impact
This measure is not expected to have any significant economic impacts.
Impact on individuals, households and families
This measure will benefit individuals who voluntarily send in a tax return where HMRC has not issued a statutory notice to file a return.
These returns will now be treated as legally valid returns on an equal statutory footing with all other tax returns. There is no impact on family formation, stability or breakdown.
Equalities impacts
It is not anticipated there will be any impacts for those in groups sharing protected characteristics.
Impact on business including civil society organisations
This measure is expected to have no impact on businesses or civil society organisations as it ensures that previously submitted voluntary returns are legally valid.
This measure will benefit all businesses and civil society organisations who voluntarily send in a tax return where HMRC has not issued a statutory notice to file a return and removes any doubt about their validity.
There is not expected to be any impact on administrative burdens or any ongoing costs.
Operational impact (£m) (HMRC or other)
There is no operational impact on HMRC.
Other impacts
No other impacts have been identified.
Monitoring and evaluation
The measure will be monitored through information collected from tax returns.
Further advice
If you have any questions about this change, please contact Jim Fedigan, Tax Administration Policy and Strategy by Telephone: 03000 547 075 or email jim.fedigan@hmrc.gsi.gov.uk.