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The Single Customer Account: A key piece of HMRC’s digital jigsaw

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A crucial element in achieving HMRC’s digital transformation ambitions will be the Single Customer Account, which could turn out to be the real game-changer in transforming UK tax compliance, writes AccountingWEB columnist and former ICAEW president Paul Aplin.

22nd Mar 2022
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Making Tax Digital (MTD) is only one element in the digital transformation of tax administration. Technology offers many possibilities, not all of which will be affordable or appropriate. The key to making best use of technology in this domain is to ensure that it brings together timely, relevant information in one place with the functionality to make it accessible and useful to taxpayers, agents and HMRC in a consistent and mutually cost-effective way.

The fact that HMRC was a very early adopter of digital technology in some ways makes it more difficult to achieve this goal: legacy systems designed many years ago do not easily integrate with new systems. HMRC has also on occasion designed new systems that do not integrate (such as the UK Property Reporting Service for CGT on disposal of UK residential property, which should have been designed to integrate from day one with the self assessment system). All pieces of the jigsaw need to fit together by design.

We need a new approach, where systems are designed from the very outset to integrate, to give users – HMRC, agents and taxpayers – access to the same data at the same time and to make use of existing identifiers rather than creating more complexity by adding new ones. Such an approach is vital if HMRC is to achieve the ambitions set out in its 10-year digital transformation strategy published in July 2020. A key element in that transformation will be the Single Customer Record (SCR) which will feed the Single Customer Account (SCA). 

The OTS view

I believe the SCR and SCA will together form the hub around which more personalised and efficient digital tax administration is built. I am therefore completely supportive of the enthusiastic position the OTS has taken on this in its recent Evaluation Note on the Single Customer Account.

The OTS describes the SCA as being “at the heart of the government’s 10-year strategy for tax and the keystone which will lock all the other pieces in place”. The SCA will, in the government’s words, enable taxpayers “to view their tax position and tell HMRC anything they need to know through a single online account”. The potential is huge, but delivering it will require not just vision but sustained commitment and funding. The current signs are positive: funds were committed in both the March and October Budgets last year.

One stage of development will be to bring all information currently held by HMRC about an individual taxpayer into their SCA; another will be to bring in any information provided through MTD for Income Tax. Beyond this, there is the potential for HMRC to seek additional information from third parties to enable increasing degrees of tax “return” pre-population, something the OTS explored – and advocated – in its report Making better use of third-party data: a vision for the future last July. I say “return” because the ultimate goal is a largely or wholly pre-populated document.

In the longer term, the SCA could include the state pension and some social security benefits. The OTS suggests an overhaul of the PAYE system to ensure that the PAYE and SCA systems are properly aligned, that the SCA should facilitate taxpayer registration (and be the hub for claims and elections) and that HMRC should publish an indicative roadmap, setting out key development stages over, say, the next five years.   

Experience counts

It is easy to simply focus on technology and data but the SCA’s potential extends to influencing taxpayers’ attitudes to tax. The UK tax system is, like many others, built on high levels of voluntary compliance and goodwill. That goodwill may have a fair degree of elasticity, but it is not infinite and depends upon people’s perceptions of being treated fairly and receiving a good service. The SCA has the potential to be the main touchpoint with HMRC for 32 million individual taxpayers. If they see it as something helpful, then that will colour their view of tax administration in general.

What do I mean by helpful? If, for example, the SCA shows taxpayers their up-to-date tax position and the data on which it is based; if it prompts and then enables them to claim reliefs they are due (for example, relevant flat rate job-related expenses); if it warns them of impending compliance obligations and makes it easy for them to comply. All of these examples would be seen as positives. And if people can obtain information and take action through the SCA that would otherwise involve a call to HMRC’s helplines, that would improve their experience as well as reduce pressure on helplines.

I have said this in other AccountingWEB articles, but the new SA penalty regime provides a perfect opportunity for technology to colour a taxpayer’s view of HMRC and lay out the benefits of digitalisation. If prompts are channelled digitally to taxpayers to warn them they are about to incur a penalty point and the system proactively helps them avoid it, this would send a positive “here to help” message. If this opportunity is missed, then the risk is that a negative message is sent.

While I believe the new regime is fairer, it is vastly more complex and significantly increases the number of potential infractions due to the MTD quarterly reporting obligations, in some cases from one a year to 15. The SCA and an improved app could be key elements in delivering this functionality and experience.

The keystone

I think the word the OTS used to describe the SCA is well-chosen. MTD is one building block in HMRC’s digital ambition – and one that has inevitably attracted a great deal of attention given its impact on businesses. But the SCA, as the hub connecting numerous sources of information and acting as the visible interface between taxpayers and HMRC, will I believe turn out to be the real game-changer in transforming UK tax compliance.

Replies (33)

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By ireallyshouldknowthisbut
22nd Mar 2022 11:33

How this this different from the current single customer account?

or the one before that?

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By justsotax
22nd Mar 2022 12:10

the real game changer would be simply doing their job.....as usual technology is put forward as the silver bullet when it rarely is...

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By Red1960
22nd Mar 2022 12:20

More garbage from HMRC... which is being excused by the tax gap.

If HMRC were just to take a look at phoenixing MTD would be unnecessary. Maybe someone should explain what phoenixing is to them?

It always astonishes me that HMRC seem to be incapable of looking on the Companies House website to check the history of directors who have a string of companies all of whom have gone under leaving a trail of substantial tax and commercial debt behind them but have substantial assets hidden in the name of family members or are using family members to front new companies whilst they continue doing what they have always done as shadow directors whilst HMRC... do nothing.

Companies House reform, MLR, MTD etc. etc?

Don't make me laugh.

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Replying to Red1960:
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By Brightster
24th Mar 2022 11:54

25 years ago, when I was employed by HMRC, I read a very good report prepared by a Tax Inspector in the office I worked in regarding phoenixsm and how to counter it. Obviously, he passed it up the chain through management, never to be seen or read again - too much of a challenge to actually try and prevent persistent company tax evasion.

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By Winnie Wiggleroom
22nd Mar 2022 13:44

Yes in theory of course it sounds great, you have all these different systems with different pieces of the jigsaw that will all feed into one place, but there are two major issues with that.

Firstly, those pieces of the jigsaw will never make the complete picture, and once you tell people that the one source of data can be relied upon they will rely on it. ("well my HMRC account didn't show the interest so didn't think I needed to tell you about it"). How many thousands of individuals will be in receipt of close company dividends for example that will not come from an automatic data source?

Secondly, we have had years now of HMRC not being able to correctly feed that data consistently, take one example, the employment income figures we get via the API, once again this year I had a H&W company both earning exactly the same from the same PAYE scheme, for one the data was there for the other it was not. For goodness sake it even takes HMRC 6 months to "clean" the data!

And point 2B is that up until now HMRC have been unwilling to provide even the most basic data in an efficient way (CIS deductions anyone?)

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Tornado
By Tornado
22nd Mar 2022 13:47

An interesting article but full of fantastic ideas and aspirations that can never be achieved. The article itself provides many of the reasons for this such as the overriding craving for the latest technology and to hell with anything that already works OK.

With the abysmal record of the Government when it comes to technology and the bureaucratic way that IT projects are planned, this is just idealistic fantasising. I think there is more chance of building a small city on Mars than the Making Government Digital Project succeeding.

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By GHarr497688
22nd Mar 2022 14:44

I beg to differ and I have a lot of experience with HMRC over a 40 year period working for and then owning an Accountancy Business. The key mistake that HMRC makes is they think technology can replace human beings . To use technology an individual has to be interested and also knowledgable. Many self-employed and employed for that matter have no interest in tax and simply do not understand the highly complex tax system we have. Dashboards designed to look good just dont work , especially when the figures are incorrect or the person explaining the figures at HMRC have no interest in really helping the so called "customer". The "bods" at HMRC need to get real , stop manipulating the statistics and work with Accountants on the ground to see the reality of the problems. Keep tacking on bit to an old IT system is daft and just putting it out for use untested is madness. I think HMRC has sacked all the good people so all you have now is low paid individuals who have little interest other than getting people of the phone or referring them to a web page to solve a problem - or even blaming the Accountant for whatever mess HMRC has created. I am so pleased I won't be part of this digital revolution promised since 2015 !! I think that alone says it all.

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Replying to GHarr497688:
Tornado
By Tornado
22nd Mar 2022 15:00

"I am so pleased I won't be part of this digital revolution promised since 2015 !! I think that alone says it all."

This was the fantasy back then -

https://www.thisismoney.co.uk/money/comment/article-3414649/DAVID-GAUKE-...

It seems to me that the Horror that we are contemplating now is far worse than the Horror David Gauke alluded to.

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By GHarr497688
22nd Mar 2022 15:23

NB: The majority of letters I get through the post are from three sources:

Local Council
HM Revenue & Customs
National Health Service

funny that.....

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Replying to GHarr497688:
Tornado
By Tornado
22nd Mar 2022 15:35

I may be a bit out if date here, but I believe the postal service is still THE most secure way of communicating information.

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Replying to Tornado:
Ivor Windybottom
By Ivor Windybottom
22nd Mar 2022 15:44

Nope, fax is!

Secure end-to-end communication in real time... the future is fax.

Who needs e-mail?!?

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Replying to Ivor Windybottom:
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By moneymanager
23rd Mar 2022 09:59

REAL fax is secure but the vast majority are diverted from the phone lines onto the email system, PDFs can be read, no reason why a fax couldn't be?

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Replying to Tornado:
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By GHarr497688
22nd Mar 2022 16:42

What relevance is that to my statement and why do almost all other commercial organisations including banks prefer digital technology for communications ?

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Replying to GHarr497688:
Tornado
By Tornado
22nd Mar 2022 18:17

Despite having the ability to communicate with people via digital means, those three organisations still use post to ensure that their communications get to the intended recipients.

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Replying to Tornado:
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By GHarr497688
22nd Mar 2022 23:32

Yes I do understand that however utility companies , banks and other large organisations no longer promote postal means of communication on the basis that secure encrypted digital communications are safer than post , can be tracked when read and generally are logged in a secure portal. Surely this form of communication should be an option at least to save costs to the taxpayer. The problem is Councils, NHS and Government bodies seem to be above the way a commercial business is run even though the reality is they should be accountable like any other business rather than just constantly saying they have met targets , will do better and more annoyingly using the work "sorry" without true intent.

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By Open all hours
22nd Mar 2022 15:33

Indeed ‘technology offers many possibilities’ sadly these mainly involve make life more complicated than it needs to be and facilitating such almighty ****ups than were ever previously dreamed of.
When (I won’t see it) we (you) have technocrats who begin with the premise ‘I will make this simple or not at all’ rather than ‘look how clever I can be’ - at that point there may be real progress.

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By SXGuy
22nd Mar 2022 17:02

Sorry, you lost me at customer.

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By carnmores
22nd Mar 2022 17:44

and what about 1 agent account rather than the current nonsense

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By moneymanager
23rd Mar 2022 09:46

The real game changer would be the drastic, root and branch, hacking back of the tax code.

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Replying to moneymanager:
Tornado
By Tornado
23rd Mar 2022 09:57

That is a very sensible idea ....... which is why it will never happen.

More likely that the code will increase to 30,000 or even 40,000 pages, with perhaps a few hundred more being added today in the Spring Budget.

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Replying to moneymanager:
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By NeilW
23rd Mar 2022 10:12

The tax mechanism of the UK can run on two taxes: what we currently call Employer's NI, and what we currency call council tax.

NI will need to be made progressive and apply to all, including the self-employed, but the tax does what a tax is required to do - make employing people more expensive so the private sector provides fewer jobs. Those left are then hired by the public sector to do what the government is elected to do.

Council tax should be replaced with a tax based upon the heated area of a property, and is the way that local services are funded. Property doesn't move, people do, as we can see with the mess around Scottish Income Tax which is transferred to Scotland based upon an estimate by HMRC because they can't work it out accurately.

Strip the tax system down to these two, and we really will have simplification.

As well as airborne pigs.

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By moneymanager
23rd Mar 2022 10:02

Would anyone want to fly on Concorde MkII designed and built by HMRC?

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Replying to moneymanager:
Tornado
By Tornado
23rd Mar 2022 10:33

This is again a very good point.

HMRC provide some basic 'software' for people to use and some of my clients successfully use the HMRC Payroll. The problem with the Payroll is that it is limited to just 10 employees (although it is possible to use several groups of 10 for a bigger payroll).

This restriction just illustrates the limits that HMRC work to (whether self-imposed or by Government decree) in order NOT to upset commercial payroll providers.

I believe HMRC could provide universal software for free use of everyone that has been commercially designed by professionals and will do everything that is required, but this would undoubtedly mean the end for many commercial software providers not included in the project. (Some might say that this would be good as many commercial developers stand to earn £billions from the forced use of their software by HMRC).

So the biggest insoluble problem with any fancy Government IT projects, in my view, is the inability to create excellent Government software without affecting commercial developers, and so the problem will go on, and on, and on.

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By Jimess
23rd Mar 2022 10:18

The ideals presented in the Ops post will never come to fruition until the Government realise that not everyone is willing to embrace digital technology. Even if everyone was given the internet capability and the equipment to use, there will still be many who just will not embrace it. Who can blame them when every day that goes by people are bombarded with marketing e-mails, internet scams, telephone scams. I can guarantee that probably 2 out of every 3 phone calls I receive are call centres, marketeers or just plain scammers. Likewise my e-mail inbox fills up regularly with marketing mail, scam messages and pure rubbish that you have to spend time eradicating before you get to the important messages. This reduces trust in technology and until something is done to eradicate the selling of data lists, whether it is private data or not, there will be resistance to digital services. It doesn't matter how pretty or how informative or even how usable the digital service is, if people do not feel safe using digital services, they will simply reject it.
The other side of this is a feeling of "oh no not again" - how many times have you been told by a software company that this software will make your life easier, will speed up processing etc, until you really look at it and realise that you can do it quicker on paper. I am not an IT luddite, we do use technology quite widely, but I do question the time it takes to do certain tasks on software sometimes it is just as time consuming, if not more so - "All that glisters is not gold".

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By rfandaltd
23rd Mar 2022 10:50

The following reply staring at a belly laugh, (or possibly laugh of despair - take your pick) was aimed at the smug, ivory tower drivel from the FST lauding MTD last week, but it is equally appropriate to every HMRC / Fintech sponsored nonsense calling the steaming MTD [***] a fragrant bunch of roses.

Unprovoked war crimes from a war criminal will always be war crimes from a war criminal no matter how fervently, repeatedly and constantly the Kremlin tells everyone its a special military operation.

MTD and all pieces of HMRC's digital jigsaw is a steaming [***] to be avoided or best of all flushed away and got rid of, no matter how much HMRC, Government and it's fintech chums tell us it's a fragrant bunch of roses or a juicy bacon sandwich we will really enjoy if only we don't believe our eyes, ears, noses and join in their fantasy.

I can't believe anything as impartial and worthy of consideration from anyone so immersed and connected to the self serving and utterly pointless to small practice governing bodies, HMRC or Government.

All hail fintech, big 4, FSTE100 board members, gong chasers and absurdely overpaid consultants.

Small business and small accountant backbone of this country's commercial life that gets the tax calculated and paid in so it can be wasted on such fantasies as MTD be damned. You are worthless and of no interest to the 'great and good'. Neither are your opinions or experience and knowledge of how things operate in the real world that 99% of us inhabit.

HA ha ha ha ha!

Is everyone working for HMG / snout in the taxpayer funded Westminster, Whitehall feed trough so out of touch with reality they could have been gorging on LSD?

Thank goodness I'm out of it professionally, but unfortunately still have to occassionally log on - or try to log on to the Gov gateway to do HMRC related things. Not once has the experience been pain free. Numerous crashes in the middle of entering detail so time and effort completely wasted or simply 'no service at the moment' nonsense so cannot do anything anyway.

I have never commercially or institutionally come across or been forced to use by diktat and lack of competition such an unaccountable, incomptentent and useless service provider as HMRC.

Get the basics of HMRC right you stupid, self satisfied, self serving, nepotistic, gong loving, fintech backside licking morons in Government and sack the entire senior management tier of HMRC as too incompetent to find their own backsides without someone to help them before wasting £billions of our money in Putin style decree and fake news on this idiotic, oppressive and ultimately unworkable MTD nonsense. The only beneficiaries of MTD are fintech and the troughers with excessive consultancy contracts, gongs in the offing and looking for a leg up the greasy political pole while they leave their chaos behind for someone else to sort out.

I've given up accountancy over MTD. I'm not an unpaid, enforced and HMRC despised facilitator for the most incompetent arm of Government to make the unworkable work.

I call on all practising accountants to refuse to engage with MTD and watch it burn. It's the Government's, HMRC's and fintechs' bad trip. Let them make it work or go mad.

I hope so much the FST gets to read these comments to her delusional nonsense. Get out in the real world and talk to proper small businesses and accountants, not your FTSE100 board chums and the big 4 clowns.

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By North East Accountant
23rd Mar 2022 13:33

"I say “return” because the ultimate goal is a largely or wholly pre-populated document."

Based on HMRC's woeful new CGT return experience HMRC are living in fantasy land if they think they are going to achieve this any time in the next 10 to 15 years.

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Replying to North East Accountant:
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By carnmores
23rd Mar 2022 14:02

I've lost track of where we are on the CGT property integration saga. ids there a box on the 22 tax return for CGT already paid? or will they be tieing themselves in knots again chasing monies not due?

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By johnjenkins
23rd Mar 2022 13:34

There is something called SA. The idea behind it is that all tax payers income, profits Etc. are recorded on one form every year. We had something else called "agent strategy" which was supposed to allow agents access to all tax payers stuff at HMRC. The solution Paul, is not a jigsaw puzzle with pieces missing, but a train with a carriage that can pick anyone up and travel anywhere. Come on Paul let's face it the OTS is nothing but a PR exercise gone wrong. One example, OTS said get rid of IR35 Again HMRC have brilliant ideas, then it all goes to pot. MTD, great idea over time, but QU for the non VAT people, a joke.

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Morph
By kevinringer
23rd Mar 2022 14:03

HMRC announcement from 6 years ago https://www.gov.uk/government/news/self-assessment-is-simple-with-a-pers...

"The Personal Tax Account is available to everyone and, once registered, each customer’s personal tax details are stored in one convenient and secure online place."

So what's changed?

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Morph
By kevinringer
23rd Mar 2022 14:09

Did anyone at AWeb study the jigsaw graphic before publishing it?

"All pieces of the jigsaw need to fit together by design."

Note that some of the pieces do not have lugs or cutouts: they are two opposing corner pieces pushed together. Very apt for HMRC. Maybe this choice of graphic is indeed intentional.

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Replying to kevinringer:
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By carnmores
23rd Mar 2022 14:27

LOL

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By Brightster
24th Mar 2022 09:38

All this digitalisation is a covert attempt by HMRC to cut accountants out of the process and clearly they work against us rather than with us to get things right. Just look at how awkward HMRC make getting information out of them, when we are the authorised agents. What they ultimately want is taxpayers (NOT customers!) doing the accounting work themselves - this is where all the on-line nonsense is heading, HMRC pretending it's so easy the taxpayers can do it themselves without the need for a pesky accountant. If you have a 5-minute chat with any tradesman who is doing their own accounts/returns, you will find out mistakes they are making. When HMRC find out they are getting it wrong, they can charge extortionate penalties that the taxpayers don't have the knowledge/training to argue with. Call me cynical but I worked for HMRC for 15 years and was a Tax Inspector, so I've seen how they work from both sides.

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Replying to Brightster:
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By johnjenkins
24th Mar 2022 11:15

Let's also not forget the dedicated task of HMRC to get rid of the one man business. Already we are seeing more people on payroll and they are not all coming from benefit seekers.

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