HMRC 10-year strategy: ‘It’s all about the data’by
HMRC’s plans in the next 10 years include using more data from third parties to work out tax bills, but agents and professional bodies are asking some difficult questions.
HMRC’s 10-year strategy puts a lot of emphasis on using real-time information to improve the tax department’s overview of tax liabilities, while also simplifying the process for the taxpayer, to the extent that Wendy Bradley quipped back in February: “Using third party data is pretty much the entirety of HMRC’s Ten Year Plan.”
In addition to the £1.8bn put aside to develop the MTD infrastructure, the government recently committed another £68m to help HMRC develop the single customer account (SCA) and single customer record (SCR). The SCA will pull together all the taxpayer’s information in one place and supersed the the existing personal tax account and business tax accounts.
As HMRC sees it, the SCA will pull in feeds from a range of third party organisations to record income figures based on:
- interest certificates from banks
- dividend statements from brokers
- rental income from letting agents
- pension contributions paid
- gift aid statements from charities and from online donations; and
- employer information, such as P60, P45, P11D.
HMRC already uses some external data to pre-populate the taxpayer’s online tax account. But as the ICAEW Tax Faculty pointed out in its commentary on the Office of Tax Simplification Making better use of third party data consultation, some of the data in taxpayer accounts isn’t accurate.
Previously the Tax Faculty expressed concern that PAYE codes were not well understood by taxpayers and automated updates based on data feeds could overload them with too many changes and too much detail.
“All of this pre-supposes that the information supplied is accurate and taxpayers and their agents would still want to check this. None of this is easy,” the ICAEW tax experts noted.
Problems with existing data quality
AccountingWEB member kevinringer was ready to pounce with multiple examples to substantiate the institute’s stance. “The first step is to make better use of the information HMRC already has. For example, why are student loan deductions on the P60, but not the P45?” he asked.
“I’ve got a client who never received payslips and relied on the P60, but he’s ceased employment in 2020/21. HMRC has the student loan information from RTI, so why doesn't it download through the self assessment API?”
That was just one of many gripes about HMRC data quality and sharing. Ringer also experienced issues around having to wait for the PAYE reconciliation before the SA API will download figures, inaccurate CIS figures and, more recently, SEISS compliance processes failing to register data from self-employment income.
After complaining to HMRC at the end of October about a client who had claimed SEISS while ceasing one source of self-employed income but continuing with another, Ringer got a call from HMRC’s complaints department this week.
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