HMRC’s new Guidelines for Compliance (GfC) are published products which set out practical steps for taxpayers to follow to help them understand HMRC’s view in complex, widely misunderstood or novel areas.

Guidelines for Compliance set out practical steps for taxpayers to follow and sit alongside existing guidance. They are part of HMRC's ongoing commitment to publish practical guidance to support customers, enabling them to better understand what HMRC considers to be good practice and what HMRC considers a tax risk.

The history behind GfC

At Spring Budget 2021, in recognition of the role tax administration plays in supporting the UK’s competitiveness and promoting investment, the government announced a review of large businesses’ experiences of UK tax administration.

Following engagement with stakeholders, the government announced action to improve tax administration for large businesses and make the UK an easier place to do business. One of these actions was to mitigate uncertainty through the publication of new Guidelines for Compliance and improving other guidance.

What has happened to date

HMRC has a new team leading on implementing this action. Aspects of Guidelines for Compliance (GfC) follow on from the positive stakeholder feedback on the practical guidance that was piloted to support the Profit Diversion Compliance Facility. GfC will be published following targeted stakeholder engagement and, where appropriate, will be followed by other educational activity.

What HMRC has published to date

Following collaborative engagement and feedback from stakeholders the first GfC, GFC1 (2022): Guidelines for Compliance — help with PAYE Settlement Agreement calculations has already been published.

It helps employers reduce the risk of error when calculating amounts of Income Tax and Class 1B National Insurance Contributions (NICs) payable, whilst also providing details of HMRC’s preferred method of submitting calculations concerning PSA.

In designing the first guideline, HMRC utilised customer behaviour analysis to expand on existing guidance, clarify common errors and summarise contact routes. All of which will help mitigate uncertainty and enable customers to self-correct.

Look out for the second GfC, on apportionment of consideration for VAT, which is due to be published shortly.

How should I use Guidelines for Compliance?

The GfC are not intended to replace existing HMRC guidance and technical manuals. GfC should be read in tandem with existing HMRC products, complementing and clarifying their content to provide additional support to our customers.

Each GfC will be linked into the relevant pages of existing HMRC guidance so that they can be located at the relevant time. They will highlight approaches that HMRC views as lower risk, in accordance with the law to reduce uncertainty by:

• clarifying HMRC’s view in areas of uncertainty
• providing examples for customers and agents to use to identify the indicative risk profile of their arrangements
• giving indications of likely HMRC compliance responses
• giving indicators of suitable documentation and record-keeping to support positions
• providing clear contact routes into HMRC for customers to update their tax affairs.

It is important to note that GfC form part of HMRC’s published material and should be considered for the purposes of the Notification of Uncertain Tax Treatment regime.

What should I do next?

You should:

• Regularly visit the GfC homepage to ensure you are up to date with the most recent releases and updates.
• Use the relevant GfC to support you where they are applicable to your tax affairs, or your clients’ tax affairs.
• Get in contact with the GfC team at HMRC if you need to, on [email protected].

The GfC team are also interested to hear your feedback, questions and ideas on existing and future GfC.