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ABAB annual report takes an Oliver Twist approach

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While HMRC’s Administrative Burdens Advisory Board’s annual report gave HMRC staff credit for their desire to improve the tax system, it also cast itself in the role of Dickens' eponymous orphan, asking the tax authority ‘please can I have some more’.

15th Dec 2023
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HMRC’s Administrative Burdens Advisory Board (ABAB) has published its 2023 annual report. ABAB exists to provide HMRC with independent insight on issues relating to the regulation and administration of tax for small businesses and to act as a “critical friend”. I declare an interest as a member of ABAB (and as such can attest to the candour that underpins the engagement between ABAB and HMRC).

A theme that runs through the report is digitalisation.

Making Tax Digital

Unsurprisingly, the first aspect of digitalisation mentioned is Making Tax Digital Income Tax Self Assessment (MTD ITSA). In its 2022 report, ABAB expressed deep concerns about the programme, highlighted several specific issues and urged HMRC to delay the project in order to address them. Shortly after publication, the government announced a deferral from April 2024 to April 2026 and phasing of mandation together with a review focused on those with qualifying income below £30,000.

The conclusions of the review were announced at November’s Autumn Statement and several of ABAB’s key concerns were addressed:

  • Making quarterly reports cumulative, which will simplify the process for correcting errors and omissions
  • Measures to ease reporting for landlords
  • Acknowledgement that MTD ITSA must cater for multiple agents, for example where a bookkeeper deals with quarterly returns and another agent deals with the finalisation and a commitment to seek solutions to mitigate the impact of Basis Period Reform on businesses with non-fiscal year ends.

In her introduction to the report, ABAB’s Chair, Dame Teresa Graham says on MTD that “having felt frustrated at times that our advice has not always been listened to and acted on, we have been encouraged by the more collaborative approach we have witnessed over the last 12 months,” adding “there is still much to do however and it is absolutely vital that the collaborative approach is maintained.”

The report repeats ABAB’s earlier caution that the MTD ITSA pilot will be mission-critical and that as many real-life scenarios as possible must be thoroughly and successfully tested through the system before mandation.

Its position is summarised as “fully supportive of MTD’s core aim of improving the quality of business records”, but with the rider “as we have said in previous reports, change must be implemented in the right way and at the right pace: tax is not and never should be the only driver for change.”

Other digital initiatives

ABAB shares the enthusiasm formerly shown by the Office of Tax Simplification for the Single Customer Account (SCA), which will bring together all tax information for a particular taxpayer in one place. As with MTD, ABAB emphasises the need to adopt a “co-creation” approach to the SCA through in-depth consultation with external bodies. I have written about the SCA previously for AWEB.

The report also mentions work on the Check Employment Status for Tax (CEST) tool for deciding whether to classify a worker as employed or self-employed. Having said in its 2022 report that CEST was not sufficiently robust, ABAB notes in the latest report that CEST has moved to a new platform and that customer satisfaction scores have increased as a result.

Other areas

ABAB has engaged with teams across HMRC. One such is the Futures and Innovation Team which looks at emerging technology and concepts to understand their potential impact on tax administration. Another is the Individuals and Small Business Compliance Directorate which is responsible for managing compliance risks across approximately 32 million individuals and 5.5 million small businesses. ABAB has encouraged HMRC to look at how it can co-design with small businesses and representative bodies to create better and less burdensome interactions.

ABAB has also engaged with HMRC’s Customer Strategy and Tax Design Guidance Team, the Department for Business and Trade and the banking sector to provide improved guidance to startups, to address common errors and reduce administrative burdens.

In addition, there have been conversations with the Tax Administration Directorate (responsible for the legislation, policy and guidance underpinning tax administration). These have covered issues such as the operation of correct tax codes and problems associated with incorrect codes, information and data powers, simplification and modernisation of HMRC’s income tax services, service levels and helpline restrictions.

The ABAB Customer Experience Working Group has taken deep dives into specific areas of concern, including HMRC forms, the experience of first-time filers and tax coding guidance.

2023 and 2024

2023 was another extremely challenging year for smaller businesses and the breadth and scale of ABAB’s work over the year reflected that. To inform its work, ABAB tries to obtain as much feedback as possible from small businesses themselves and the 2023 Tell ABAB survey attracted almost 7,500 responses. The ABAB email address is open year-round [email protected]

2024 is likely to be an equally challenging year and at the end of her introduction to the report Dame Teresa offers some agenda items for HMRC:

  • Progress MTD, but with care
  • Press forward with the SCA
  • Show how you are going to pursue tax simplification

Appropriately for the season, the report concludes that “the HMRC staff we meet deserve great credit for their hard work and desire to improve tax systems, but ABAB is an Oliver Twist-like entity, with a likely response of ‘please can I have some more’”.

One prediction I can make with absolute confidence is that Oliver Twist will still be making that request this time next year.

Replies (1)

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By FactChecker
15th Dec 2023 14:13

Congratulations to all in ABAB who contribute so freely of their time/experience (and dollops of common sense) ... and wishing you a massive influx of the patience that will be sorely needed.

I know from previous involvement in several groups that it is hard not just to reach out and bang heads (one's own if necessary) on tables, whilst trying to remain positive/polite:

“fully supportive of MTD’s core aim of improving the quality of business records” - but refraining from asking to see the evidence-based logic behind how MTD will actually support that aim.

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