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MTD: Smarter use of third party data

Wendy Bradley is baffled as to why the Office of Tax Simplification (OTS) is running a call for evidence on the provision of third-party data.

25th Mar 2021
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UK government tax office in London.
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Using third party data is pretty much the entirety of HMRC’s Ten Year Plan for tax policy development, so why is the OTS and not HMRC running this consultation?

There are three ways to conduct a public consultation on a tax policy.

Scoping consultation

This is rarely used, but perhaps it should be more common.

The scoping consultation asks:

  • Is this issue important?
  • Is it impacting enough people or costing/raising enough money to warrant serious work on it?
  • How much of a priority is it to find a solution to this problem, rather than all the other issues in the queue.

Options consultation

HMRC or the government has identified the problem to be dealt with and now is considering options for dealing with it.

The options consultation is an open question such as: What do you think about doing:

  • This
  • That
  • Something else
  • Do you have any other bright ideas?"

Technical consultation

This is familiar to many tax geeks. The draft legislation is presented plus the tax information and impact note (TIIN).  This should address all of the following:

  • What the government is doing
  • Why it is doing it this way
  • What options have been considered
  • How much the government thinks it will raise or cost.

The TIIN should also cover which other policies (eg small businesses, families, equalities, settled policy priorities) the government has considered.

The key questions asked are usually:

  • Does the legislation work?
  • Have we got the figures right?
  • Have we missed anything?

What is the OTS doing?

The Office of Tax Simplification is an organisation which should inhabit the first and sometimes second of these areas. For example, the OTS should ask: We think X is a problem – do you agree it's a priority? Do you have ideas how we can fix it?

Here, though, the OTS seems to be trying to fix a problem that is already being fixed. Using third party data to prepopulate self assessment tax returns is already a settled policy objective with a ten year timescale and a lot of work is already under way in this area.

The key point of bafflement for me is that the scoping document issued in December 2020 asserts that in considering the "smarter" use of our data OTS will:

  •  "take account of GDPR and relevant data protection laws" - I can find no evidence of a serious engagement with data protection issues in the follow up documents.
  • "engage widely with stakeholders"

• take account of the extent to which HMRC having better data could assist them in supporting other government departments (such as DWP) in delivering their services.

Having a laugh

The suggestion of wide engagement with stakeholders is, frankly, laughable. Who are the stakeholders here? Everyone who has a bank account, receives dividends, makes charitable payments, or pays into a pension?

Putting a consultation onto the government's website is not the same thing as communicating it to taxpayers. Where are the newspaper and magazine articles, the radio interviews and the OTS podcast, the segment on the Martin Lewis show?

If you are really interested in the public's views of a major change to the way their data is gathered and processed you would go public big time, not stick a consultation on a website and say you've consulted your stakeholders.

Am I too cynical in thinking the sticking point is how easily having this big, smart, data bank would be useful to "other government departments” (such as DWP). Oops, I’m turning  into a conspiracy theorist!

Action now

The OTS call for evidence closes on 9 April 2021 so you have a little time to make your views known.

As well as the option to email in your evidence there is also a simplified online survey you should be sharing with your sisters and your cousins and your aunts.

After a couple of basic questions about your age, location and taxpayer status (but not your I.D.) it asks:

  • Would you find it simpler or easier if third parties you have dealings with supplied data directly to HMRC, to then be stored in your personal tax account and used to help you get your tax right?
  • What would you consider to be the main benefits of third parties providing data about you directly to HMRC in this way? Please select all that apply.
  • What would be your main concerns if data about you were reported directly to HMRC by third parties? Please select all that apply.
  • For your data to be reliably allocated to your personal tax account by HMRC it is likely to need to be accompanied by details of your national insurance number. Which organisations would you be more inclined to trust to report data directly to HMRC to be reflected in your online account or prepopulated into your return?
  • White space for "further thoughts".

Replies (7)

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By adam.arca
25th Mar 2021 18:32

On the contrary, I would say that a consultation like that makes sense. But only if it is an OTS pushback against the Revenue assumption that third party data and pre-population is the promised land and then we’ll all live happily ever afterwards.

The OTS isn’t an organisation I usually have much time for and, cynically, it could be said that this sort of consultation is merely for appearances sake so we can’t say we weren’t “consulted.”

Thanks (2)
Replying to adam.arca:
By Wendy Bradley
25th Mar 2021 20:15

I don’t think OTS would be my go-to organisation for pushback, tbh!

Thanks (1)
Replying to wendybradley:
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By adam.arca
26th Mar 2021 09:21

Nor mine, Wendy! I live in hope rather than expectation.

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blue sheep
By NH
26th Mar 2021 06:36

There is an inherent problem with HMRC/OTS consulting stakeholders when HMRC/OTS think they have a good idea, the chances are the stakeholders will disagree.

For example it would have been so much better if HMRC could have consulted a representative panel of accountants in practice before announcing anything to do with MTD, and I mean the accountants not the PBs, but there is such distrust between agents and HMRC I very much doubt that would have been productive unless it really was a genuine Working Together (now theres a good idea)

The same applies here - HMRC have already decided they will have the data so OTS are going to ask, do you you think its a good idea for HMRC to be given all your data, erm let me think about that for a minute.....well, even the prepopulated data we get from HMRC PAYE themselves is unreliable, HMRC themselves hold data they do not easily release to agents to make SATR prep easier (eg CIS deductions), so what kind of meaningful response do OTS expect?

I agree, bizarre

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ghm
By TaxTeddy
26th Mar 2021 08:02

I have said it before but until there is a minister as part of the Cabinet who is directly responsible for what happens at HMRC, this type of faux consultation will be the default way in which HMRC increase their powers.

It's looking like a government department out of control, drunk on it's own power and it's about time somebody put a stop to it. Sadly, it looks like HMRC will remain unaccountable for it's actions in the foreseeable future.

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By johnjenkins
26th Mar 2021 10:16

I wonder how many of us would be fined if we protested outside no.11? Could contribute towards the "tax gap".
HMRC=NFFP. What do we want? Agents to be trusted. When do we want it? Now.

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Morph
By kevinringer
27th Mar 2021 13:46

HMRC launched a consultation on this matter way back in August 2016 to be delivered between 2017 and 2020 https://www.gov.uk/government/consultations/making-tax-digital-transform.... Five years later and HMRC have achieved nothing. Instead of being challenged as to why they got nowhere, HMRC put it in a 10-year plan as if it's a great new idea when in fact it's already missed its implementation deadline. Why has the OTS accepted this instead of taking HMRC to tasks for failing to deliver what it promised? HMRC can't blame MTD because the provision of information was supposed to happen anyway. Look at the existing Self Assessment API that is supposed to pre-populate some limited information: it isn't reliable, there's loads it could deliver but doesn't (eg state pension, student loan type and deductions, CIS deductions, UK tax residency, PAYE liabilities coded in and out etc) and it only works with third party software - it doesn't even prepopulate HMRC's own tax return software.

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