Creating innovative change through new legislative pilots

The ATT has responded to to the HMRC discussion document The Tax Administration Framework Review – Creating innovative change through new legislative pilots (‘the Consultation’) which was issued on 27 April 2023. 

The document outlines a proposal to introduce 'legislative sandboxes', which would allow HMRC to suspend the usual tax rules for short periods of time for small groups of taxpayers, who would instead be asked to follow different rules from the rest of the population in order to test new policies or procedures. 

In the ATT's response, we highlighted our concerns around the potential extra time and costs for taxpayers from being involved in such 'sandboxes' or pilots. We also expressed disappointment that HMRC was unable to provide any specific examples of recent situations where these proposals could have been beneficial because they had been constrained by current law from completing a pilot or had been unable to test a new policy as they would have wished. 

In our response, we highlighted some areas of improvement with the existing processes of testing new systems and processes. We think that there needs to be more testing of whether systems actually do what they need to do and if they match the underlying legislation - something we referred to as 'Ronseal' testing. Based on members' experience of new systems in recent years we also suggested that the most useful place for a 'sandbox' would be to protect those who cannot immediately access HMRC systems on launch. Instead of a testing sandbox, this would be a shielding sandbox, giving HMRC the powers to grant exemptions or exclusions for those who can’t immediately access new systems or processes when they first go live.