Tax transparency: The tech challenge
In his Budget speech last week, Chancellor George Osborne vowed to create a “a far simpler tax system, which businesses can easily navigate and where ordinary taxpayers understand what they are being asked to pay.”
The government’s tax transparency plans depend on technology innovations at HMRC to deliver them. During the Chancellor’s speech and afterwards, you could almost hear the “ker-ching” as pound signs registered in the eyes of government technology suppliers. Many others who have watched the painful evolution of the country’s computerised taxation systems started groaning, “Here we go again.”
We already know that the personal tax transparency proposals include a taxpayers’ statement detailing the income tax and NICs they pay, their average tax rates, and what the money will be spent on. When Treasury minister David Gauke launched the consultation document last November he mentioned the possibility of creating an HMRC tax app for mobile phones and showed screenshots for an online personal tax summary page that would allow taxpayers and employers to review and amend their records. Even constructing the basic reporting mechanism to deliver the information is likely to be a major exercise, whether or not the statements are delivered on paper or via the web.
Here are the other tax technology initiatives AccountingWEB has identified so far:
- Business Tax Dashboard - From April 2012, businesses will be able to check online all of their taxes in one screen. The new Business Tax Dashboard is designed to help unrepresented taxpayers to help them keep track of what tax is due and what they have paid. The BTD will bring together a summary of the tax position for Corporation Tax or Self Assessment and VAT and/or PAYE from April 2012.
- Merger of income tax and NIC systems - this latest policy compromise will add an extra layer of complexity to the RTI and Universal Credit developments as the guiding policy changes and new requirements are added.
- VAT online registration - Until October 2012, customers wishing to register for VAT will be directed to the existing registration channels. From October 2012, customers will be able to use the online tax registration service (OTRS) to register for VAT and be enrolled automatically for the VAT Online service at the same time. Registering for VAT online will not be mandated and existing channels will remain.
- Single registration service - This is a reference to the joint registration service which will be integrated into the existing Company House Web Incorporation service (it is expected that in due course commercial incorporation software will also offer this). There will be two additional pages at the end of the incorporation pages where companies can include the additional information necessary to register for Corporation Tax with HMRC. Completion of these pages is optional and companies can use OTRS or existing channels to register for Corporation tax with HMRC.
- Machine games duty - a new IT system will be needed to process registrations and returns and permit taxpayers to register and file returns online. This project will incur approximately £10m in additional IT costs over a seven year period (TIIN A71).