Edward Troup – departing thoughts from the Chair of the HMRC Board

Edward Troup stepped down at the end of 2017 as the Chair of the HMRC Board and was awarded a knighthood in the New Year Honours list.

Just prior to his departure Edward gave a speech to a small group of senior representations of the tax profession, including Frank Haskew head of Tax Faculty, and his remarks are reported in a blog on the CIOT website Departing thoughts from HMRC Chair Edward Troup.

Edward considered major changes to the tax world over the course of his career lasting nearly 40 years.

First he considered the enormous change in attitude to tax avoidance and Edward considered that HMRC had played a key role in identifying avoidance schemes sooner and closing them down quicker. He also acknowledged the role of the profession and, in particular, its formulation of the new Professional Conduct in relation to taxation (PCRT).

Edward also identified a changing role for those advisers whose business model was based on the inefficiency of manual record-keeping. There is no place in the modern world for an adviser that makes their money from the inefficiency of their clients. The Making tax digital (MTD) initiative was intended to build on the capabilities of technology but there will be continuing robust discussions between the profession and HMRC, long after Edward’s retirement, as to how MTD is going to be made to work for the benefit of all.

Finally Edward looked at the working relationship between the adviser and his client and what the adviser should take responsibility for. In the words of the CIOT blog:

“To what extent can you do your job by pulling together a return to HMRC which accurately reflects what you have been told but takes no responsibility for what is behind that, he asked. To what extent does a good adviser have responsibility to go further and say to their client, on occasion, ‘frankly this doesn’t look plausible’? He threw the question out to the profession, saying: ‘I do think that the adviser profession should think to what extent they should share responsibility for what lies behind returns.’  He personally thought that was the way the wind was likely to start blowing, describing it as placing a greater degree of responsibility on those who know taxpayers better. How far that will go is a genuinely open question, he said, ‘but I think that is where thinking will go’.”

Edward went on to consider how this might lead to the risk assessment of advisers and their clients and a lighter regulatory touch for those advisers/clients who are deemed to be more compliant. This is still an area for discussion and Edward recognised that:

“Differentiating [HMRC] degree of scrutiny of a client because of the historic, assessed performance of the adviser… is quite a provocative statement when you put it like that… There is scope for discussion.”