Accountants have given a mixed response to the proposal by the Inland Revenue to give its officers increased powers from next April. The new legal powers are expected to include the right to check working family tax credit records and the collection of student loans by employers. The move follows the merger of the Revenue and the Contributions Agency and the launch of the tax credit, the governments' latest brain child. The range of employer records checked by Revenue officers for compliance was extended in April to include national insurance contributions and the national minimum wage. The review has been designed to ensure that both officers and employers are clear about the extent and limits of legal powers to inspect records, and that a fair balance is struck between the needs of business and the need to ensure that employers are complying with the law. To try to ensure all parties are happy, the Revenue intends to hold early discussions with employers' representatives and other interested parties on the scope of the review. It will be inviting comments on its detailed proposals before the end of the year. The whole process is clearly going to take time to bed in. Although the Contributions Agency and Inland Revenue were engaged in similar work in respect of employer compliance, they operated under very different legal powers. In particular, the agency had greater powers to ask questions and to give promises than the Revenue. John Whiting, tax partner at PricewaterhouseCoopers, said: 'The review of powers is a good thing, but the Revenue needs to appreciate employers are having a larger and larger burden placed on them. Most employers will try to get the new system right but they have to concentrate on earning a living first, and so the Revenue should approach the situation with a light touch and not be obsessed with potential fiddlers.' Rayner Peett, Ernst & Young's tax spokesman, added: 'The extended powers are no great surprise as the merger between the Contributions Agency and the Revenue has finished now. 'The changes are a good thing as long as the powers are fairly used. 'We will be watching with interest the consultation process, and we will be making our submission at a later date. It is important the Revenue do not cherry-pick the best contributions from the agency while the whole process needs to be properly consulted on.' But KPMG partner Ian Stewart said he believed there is less of a burden on employers now than when the Revenue was doing PAYE and NI. 'This move is logical and the best we could hope for. It was inevitable as the Revenue was sensibly given responsibility for reviewing National Insurance. 'Those companies who are not doing any wrong should have no worries over extended Inland Revenue officer powers. The Revenue is looking to review money that belongs to the government. It is not a question of collection so the regulation has to be applied sensibly. 'We are looking for them to take an understanding attitude, as it is the first time the working family tax credit has been in force and these things take time to bed in, although employers should have no excuses over NI and PAYE,' he said. Chantry Vellacott tax partner Maurice Fitzpatrick added: 'We have got a Treasury which is extending its powers into other government departments. The compliance costs for the WFTC have been estimated at £100m a year for employers to administer. The government is trying to get the private sector to pick up the tab and is imposing further obstacles on employees. This trend looks set to continue.'
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