OTS considers the implications of using tech to simplify tax
The Office of Tax Simplification (OTS) has asked whether tax simplification will still be needed as technology advances. Wendy Bradley believes the answer must lie in simplifying the tax law first.
The OTS discussion paper identifies the questions it thinks the government should be asking itself before it rushes to embrace technological solutions. It identifies five issues which the government should consider and an additional point to monitor.
Losing sight of tax obligations
The OTS report expresses a generalised anxiety about what the future may hold and a curious panic that making tax administration too easy could lead taxpayers to "lose sight of their obligations".
It urges the government to consider mitigating the risk that taxpayers will lose sight of their obligations through the use of technology.
I find this a confusing proposition. Should the taxpayer be using technology to mitigate the risks or are the risks created by the use of technology?
If tax collection technology ever becomes so seamlessly integrated into our lives so that we don't notice that we've paid the tax, would that be such a bad thing?
Better taxpayer experience
The OTS proposes the government should "continue to monitor private sector technological innovation to enhance the experience of the taxpayer in managing their tax affairs".
I’m disappointed that the OTS does not suggest the government should use savings from technological innovation to do this, but the report makes it clear that, while they don't have the remit to make spending decisions, it's a decision they would make if they could.
The next section of the report looks at blockchain technology and considers the potential for introducing a scheme for applying it to national insurance records, in effect revisiting the idea of a national identity number.
The OTS suggests monitoring "the impact of the General Data Protection Regulation on taxpayer choices regarding security, privacy and convenience".
There are real issues to consider here but the balance between the convenience offered by technology and the loss of privacy entailed in realising these benefits stretches much further than tax administration.
A more practical proposal is that the government should "consider enhancing HMRC’s current personal tax account to deliver better targeted guidance and information while also looking at automatic enrolment into this service for all taxpayers".
The idea that sixteen year olds should be enrolled automatically into a personal tax account when they receive their national insurance number seems good to me: these are digital natives who will conduct their affairs via technology. I have my doubts about the "targeted guidance and information" but then I hate being nagged by my devices.
Finally, the OTS suggests "active monitoring of the impact of moves towards a cashless society and risks of digital exclusion", and this is where I take issue with their analysis. A cashless society is not something which accretes naturally like a coral reef: if it happens it will be the result of policy decisions, many of them taken by the government.
The "risk of digital exclusion" isn't a "risk" on the same level as a hurricane. It is the result of policy decisions taken over the years. The Carter report in 2006 included a vision of an electronic future for tax collection where people who chose not to have computers would drop in at their local post office or library to be helped by friendly staff to stay connected.
What happened to that future? Policy decisions. The OTS report might be a way for the government to think about them, but it is not the only one.
While it is the OTS' mission to reduce the administrative burden of tax legislation by promoting simplicity, it seems to me it would be foolish to rely on technological solutions rather than legislative changes to achieve this.