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Tax Day: The impact on the payroll

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Samantha Johnson, the CIPP’s policy lead, takes a look at the tax day consultations and responses and reports on the key issues for payroll professionals.

15th Dec 2021
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Tax Administration and Maintenance Day (TAMD) took place on 30 November 2021. In March 2021, we saw the first UK Tax Day where a number of consultations and calls for evidence were released by the UK Government. 

TAMD was the next instalment and included some key government consultation responses too.

What was the impact of TAMD on the payroll profession?

In June 2021, the CIPP responded to the consultation “Raising Standards in the tax advice market”, which looked to introduce mandatory professional indemnity insurance (PII) to those providing tax advice. The consultation considered the definition of tax advice, and whether outsourced payroll, software providers, or employers providing advice on employee benefits could possibly fall within this definition.

The CIPP’s response concluded that payroll professionals were most likely to engage in providing information and guidance as part of their role remit, however some payroll professionals will engage in tax advice.

It recognised that there can often be a fine line between advice and guidance, with some payrollers being asked by clients or employees to provide advice when it isn’t within the responsibilities of their role.

On TAMD, the government response confirmed that mandatory PII would not be introduced for tax advisers. Instead, the government will look to consult early in 2022 to determine the definition of tax advice before it looks to impose measures on those who provide it. The CIPP welcomed this response, as its research confirmed that mandatory PII alone would not raise standards in tax advice.

The CIPP continues to encourage payroll professionals to be mindful of the remit of their role and feel empowered to push back on clients or employees where they are being asked to engage in advice where it is not appropriate to do so.

The government also released a response to the call for evidence on the tax administration framework, which had the aim of delivering a system that is fit for the 21st century. In line with its 10-year tax administration strategy to build a trusted and modern tax administration system, the government confirmed that, taking account the responses, it will consider how to best “develop, prioritise and sequence” next steps. HMRC will also be developing a roadmap for future consultation and analysis on this 10-year vision.

The response included commentary on the review by the Office of Tax Simplification (OTS) in summer 2021, exploring a change in the tax year end date.

The OTS published its conclusions in September 2021. In its review, there was recognition that a change to 31 December would generate the most benefits, bringing, amongst other things, international alignment across many jurisdictions. 

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Replies (2)

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By Hugo Fair
16th Dec 2021 15:27

As a concluding statement, I feel that "The profession can be certain that changes can, and will, be implemented that will impact the future of payroll" is somewhat lacking in suspense!

On a more positive note, the lack of immediate impact contained in TAMD is of course welcome.

However no comment on "the government response confirmed that mandatory PII would not be introduced for tax advisers. Instead, the government will look to consult early in 2022 to determine the definition of tax advice before it looks to impose measures on those who provide it"?

It takes a consultation for HMRC to realise that a definition of 'tax advice' would be useful *before* consulting on controls over providers of it? And this doesn't merit comment from the Institute?

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By Fadel
10th Jan 2022 06:04

Hey, thanks for sharing this this is very good information i am joining accounting and tax firm from Monday and this will help me keep posting like this.
Myloweslife

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