HMRC’s digital tax plans under fire

An elderly woman sitting in front of her laptop looking stressed and worried

STEP attended a meeting held by HMRC yesterday (3 March 2016) to obtain feedback from tax related governing bodies regarding its imminent – and mandatory – proposals to make tax returns completely digital.

We were informed that the objective is to modernise the tax system, improve the level of service for the public and reduce cost to the taxpayer.

The synopsis of the meeting was:

  • Tax returns will become completely digital – this will be compulsory
  • There will not be quarterly returns but ‘updates’ to HMRC on a quarterly basis
  • There will be a formal update announced at the Budget on 16 March 2016
  • The objective is to reduce time and costs for businesses and individuals
  • HMRC is aware that digital tools are not accessible to everyone and it is currently researching ways to deal with this sector
  • There will be four more consultations post Budget and the deadline is end of May.

David Gauke MP, Financial Secretary to the Treasury, stated in his December 2015 HMRC paper Making Tax Digital, ‘Individual and business taxpayers will no longer have to wait until the end of each tax year before knowing how much tax they should pay, avoiding any surprises and helping them to plan their financial affairs with more certainty. And taxpayers will be presented with a complete financial picture of their tax affairs in their digital account, [and will be] able to see and manage all of their liabilities and entitlements together for the first time.’

However, many of those present raised concerns over how the less capable sector, for example the elderly or disabled people, will be able to manage their records digitally, especially if they cannot afford a computer or smart phone, or are unable to use one. Many of these people will also be unlikely to be able to afford an accountant four times a year to assist them. HMRC confirmed that it is currently undergoing research in order to provide provisions for this sector to enable them to go digital; however they could not provide any examples of solutions.

The HMRC was also asked what information will be required to be provided four times a year, since the general suspicion is that it will amount to the same information that is required for a tax return. This would therefore amount to the same time and cost as a tax return, but four times a year. Once again, HMRC was unable to answer the question specifically, and promised information would follow ‘in due course’.

There may be an option to ‘pay as you go’ if people would rather make regular contributions to their annual tax return on a monthly or quarterly basis, to minimise the liability at the end of the year. We understand that this option, if available, will not be compulsory.

We will keep you updated on developments in due course.


Emily Deane TEP is Technical Counsel at STEP.

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