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HMRC’s MTD equality assessment is late and lacking

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The government’s equality assessment on Making Tax Digital is three years late with little evidence that anyone from disabled or minority groups was consulted. Wendy Bradley is unimpressed.

23rd Jun 2022
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It is surprising that HMRC thought it was necessary to publish a screening equality impact assessment on 26 May 2022 for a policy that was implemented from 1 April 2019.

Ten years ago I used to be HMRC’s impact assessment specialist. I thought the point of impact assessment was to assess the impact while a policy was being developed and to publish the result when it was announced. I understood that equality impact assessment meant that the government had to think about stuff like equalities before it did the thing that might impact on it. That means the government can decide to adversely impact you and your peers, but only if they go into the policy change in full knowledge of what the impact of their policy will be. 

What the government wasn’t supposed to do is to introduce a policy and then, three years later, publish a document explaining how it’s all for the best really and you aren’t actually being oppressed. But things change. Maybe that’s how it works now. As it says on the landing page it’s purely performative: “HMRC completes equality impact assessments to demonstrate that equality considerations are key in decision-making processes.”

Productivity gains

We don’t need to revisit the reasons behind Making Tax Digital (MTD). It reduces tax gap by eliminating the possibility of making errors apparently (pause for a collective “ha!” from the accountancy, tax and software professions) as well as making a great leap forward in productivity. That the productivity gains come from going digital, not from making tax digital, well, we’ll ignore that.

The government isn’t providing the necessary software for businesses to make digital returns, but there is a useful page where available software can be filtered by criteria such as whether it’s free, available in Welsh, and has features suitable for people with cognitive, visual, hearing or motor skills difficulties. No results if you tick Welsh AND any of the disability issues, but presumably the disabled Welsh can sort themselves out at a later date? But the ability to filter makes the page a vast improvement over early versions that just listed software and left you to click through to find out if they were remotely suitable.

Compliance assessment

Let’s look, then, at what the government did to assess the compliance of its MTD VAT policy with its equalities responsibilities. Let’s look at what the equality impacts of MTD for VAT might be after three years of running, so that we’re better prepared for MTD for income tax self assessment (ITSA) coming at us like a train.

Firstly, who did they talk to? There’s a handy list, under the heading “assessing the impact” and it starts with “representative bodies for business (eg the Federation of Small Businesses)”. Now the Federation of Small Businesses is a brilliant organisation for small businesses, but it doesn’t have wide coverage in the micro and nano business range like those one-woman nano businesses that were severely impacted by the VAT mini one stop shop (MOSS) changes discussed in detail in years gone by. 

When you look down the list of organisations consulted, they are what we might call the usual suspects: HMRC’s “stakeholder” community – business and trade bodies, accountants, tax professionals, other government departments, and so on.

Missing organisations

Glaringly absent from the stakeholder round-up are organisations representing people with disabilities. As the impact assessment says: “To ensure the widest possible access to software that will meet MTD requirements, HMRC is working closely with software developers to make sure that there are several software products that cater for those with cognitive, motor, visual and hearing difficulties.”

Yes, they’re talking to software providers, but not to people with actual disabilities!

There are, apparently, “exemptions”: “HMRC has ensured that clear guidance is provided and easily accessible for digitally excluded taxpayers about the exemption process. It has provided mechanisms for an exemption to MTD to be easily applied for through non-digital means.”

Does anyone actually know where any of this can be found? I am not registered for VAT but presumably those of you who are will have received clear, helpful guidance through the post letting you know how you can apply for an exemption to MTD through non-digital means?

Most of the other possible equality characteristics – sex, race, pregnancy or marriage, political opinion in Northern Ireland – are felt to have no impact. Age is considered only from the point of view of older people and the mitigation offered is the extra support service (ESS).

I should like to see some evidence of how many people are offered this support and how they feel about being supported in this way. And I would also like to have seen some consideration of younger people and whether digital natives have different needs that are or aren’t being met by the software on offer. Religious beliefs are apparently met by HMRC’s services being 24/7 (so different rest days and holidays can be avoided) and carers are offered the ESS service and the ability to register as an agent.

Poor show

It’s late, it’s shabby and it doesn’t fill me with confidence. The final paragraph considers whether HMRC could have used this policy actively to promote equality: “None have been identified within the scope of this project.” 

What a missed opportunity. Remember the early days of ITSA when HMRC was confidently envisaging a future where there were computer terminals in post offices, libraries and enquiry centres so that everyone could access computers in places where someone was at hand to give them advice and help to get up and running online? Whatever happened to that? Times change. But you would hope they would change for the better.

Replies (11)

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Tornado
By Tornado
23rd Jun 2022 10:54

"It’s late, it’s shabby and it doesn’t fill me with confidence"

I think that can be applied to HMRC in general.

Thank you Wendy for adding detail to what we already suspected.

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By Open all hours
23rd Jun 2022 12:08

HMRC simply do not care. Whether it is customer service, accuracy of data, their own reputation or even how they treat those who need particular help. This is a terrible indictment on their senior management some of whom should be considering their positions.

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By Open all hours
23rd Jun 2022 12:11

A web thought the above was so good it needed to be said twice. It isn’t and it doesn’t. Once is enough.

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By Paul Crowley
23rd Jun 2022 12:33

Have HMRC ever looked at an impact statement and taken action to reduce the impact?

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Tornado
By Tornado
23rd Jun 2022 13:05

"What a missed opportunity. Remember the early days of ITSA when HMRC was confidently envisaging a future where there were computer terminals in post offices, libraries and enquiry centres so that everyone could access computers in places where someone was at hand to give them advice and help to get up and running online? Whatever happened to that? Times change. But you would hope they would change for the better."

I think the modern equivalent of this is that Software Developers and Accountants will provide assistance with using Tax and and Accounting software. The problem is that both will require hefty fees for support and advice on using this technology (no one is going to work for nothing) which will make it very difficult or impossible for some people to get the help they need.

I would hope that an assessment report would flag up this situation and HMRC would step up to the mark and provide unlimited help and advice for those (perhaps hundreds of thousands) people severely impacted by the unnecessary imposition of this MTD folly.

Equality does apply to IT ability and financial resources as well, something which HMRC seems to have misunderstood.

Thanks (9)
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By Hugo Fair
23rd Jun 2022 14:36

"I thought the point of impact assessment was to assess the impact while a policy was being developed " ... you and me both.

But it's actually worse than the mere lip-service that has been paid to the concept with regards to the missed opportunities for understanding potential (and unequal) impacts on taxpayers.

In the (now fairly distant) past I've sat on various informal groups that assisted in the 'impact assessment' of new policies *before* they were translated into legislation.
Then the assessment moved further downstream ... to gauging the impact after primary legislation but before HMRC produced specifications/guidance for software developers (including their own).
And now (as per MTD ITSA)?
The equivalent assessment has moved out into the long grass, along with the specification that has to be presumed lost in the jungle - despite the imminence of 'go live'.

There's absolutely no evidence that HMRC believe in the value of assessing anything, let alone in time to identify potential issues that could be corrected *before* they become problems.

Thanks (11)
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By snickersinatwix
24th Jun 2022 10:50

And VAT is probably the area where MTD is most likely to be successful (VAT registered businesses have been used to filing quarterly returns for years and are familiar with how it works).

And yet I understand that some 200,000 businesses still have to sign up to MTD for VAT.

How on earth do they think that landlords with rental income of just over £10k are going to cope? Currently I think I could count the number of our landlord clients (and we have a lot) who keep their records electronically on one hand. Many of them are retired and a significant number do not use any technology. they really need to re-think this!!!! I am aware they may be able to apply for an exemption. Seems like we will be applying for a lot of exemptions.

And no, I can't/don't want to do their records for them quarterly.

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By johnjenkins
24th Jun 2022 10:57

Great article, Wendy, but it does just echo what we have been saying since MTD inception.
My view is that HMRC wanted to stand back and let the software developers Accountants and tax payers "get on with MTD".
Let me be clear, I think MTD is a great concept, without QU and on a voluntary basis, not mandatory.
Natural progression is always better and has better outcomes than forced coercion.

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By DMBAcc
24th Jun 2022 11:12

So guys when exactly our we going to "put our money on the table" and tell HMRC that we and our 12 million small and micro business clients are not playing their game any more. We tell them to make it voluntary and NOT mandatory. The current SA system works beautifully for me and my 60 clients. I'm more than happy to show HMRC that EVERY one of my clients has paid the tax owing to HM Treasury and their accounts are open for inspection. I want to know who they suspect are not doing it correctly and thus the tax gap will reduce with MTD ITSA - I want the EVIDENCE!!!!!. To then naively believe that putting it on a computer makes it all ok beggars belief. To err is human but if you really want to make a mess use a computer.

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Replying to DMBAcc:
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By Ian McTernan CTA
24th Jun 2022 16:47

That would involve all our various Institutes taking a very different line with HMRC then the current cosy arrangements where they go out of their way not to ruffle any feathers.

Perhaps it's time to ballot the members and then refuse to implement it for clients if the majority decide and the Institutions back us up when things get tough.

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Replying to Ian McTernan CTA:
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By tedbuck
30th Jun 2022 16:34

But would the Institutions back us up?
I very much doubt it - they would be too scared to do it.
Perhaps we should instigate a non co-operation policy - always submitting everything at the last minute thus swamping the system - taking 6 weeks to answer their letters (might be difficult that as they don't reply to post anyway.) What I do , to help HMRC is copy all the papers to them with reminder letters so that at some stage they will have a storage problem.
Where I have crass stupidity from HMRC which is more and more often I copy the HMRC letters to the Chancellor of the Exchequer so that he can be aware of the omnishambles over which he presides. I assume that at some stage he might get p***ed off by this and place a kick in someone's backside ( actually I suppose that's unlikely as it will be sitting at home out of reach.)
I thought they were supposed to be Civil Servants not escapees from Putin's KGB.

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