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.
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.
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.
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:
- Something else
- Do you have any other bright ideas?"
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!
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".