Gaps persist in HMRC’s digital service journey

Whether it’s flat-batting MPs’ questions about Making Tax Digital failings or justifying the latest helpline closure, a standard HMRC response has been that the UK tax authority is moving to a “digital by default” approach – a wholesale move away from phone and post to online services.

However, like many of the other three-word slogans beloved in Whitehall, digital by default has a number of fundamental issues. 

HMRC’s digital services currently do not extend to all its functions, don’t always work for the agent and taxpayer users, and the complexity of tax rules and existing legacy systems means that fixing these problems is by no means straightforward.

The Institute of Chartered Accountants in England and Wales’ (ICAEW) Tax Faculty has recently issued a call to find out where its members think HMRC should prioritise resources when developing its digital services in order to address the issues above, and also ease some of the Revenue’s well-document performance problems.

The institute also underscored the need to address several key areas including:

• agent access to services and client information
• a single sign-on portal
• communication with HMRC via secure email.

Agent access to services and information

A major issue repeatedly highlighted by agents is the fact that despite being authorised by their clients, they do not have access to all information and digital services in the client’s personal tax account (PTA) and are often left in the dark on key pieces of data. 

Research released earlier this year exploring agents’ experiences of HMRC’s current digital services stated they “may not sufficiently meet agents’ needs to access client data”. The survey flagged that in order to do their jobs effectively, more than half of the agents who responded were logging in to their client accounts or asking clients to share screenshots of information in their accounts.

ICAEW has compiled a list of digital services it believes are currently not available to agents:

• view and check employment pay and tax details (some access is provided by the self assessment pre-population service and income record viewer (IRV), but these services have significant flaws)
• check and update tax codes (limited view-only access is provided by the Income Record Viewer (IRV) and for clients in self assessment)
• claim a tax refund (forms R40, P85, P87, various versions of R50, R53, R55)
• check NIC history and state pension forecasts
• track forms submitted online
• submit, check or update marriage allowance claims
• tell HMRC about a change of address
• check or update taxable benefits provided by employers. 

Other digital services available to taxpayers but not agents are: 

• appeal self assessment penalties
• make a complaint
• PA 302 simple assessments and P800 PAYE tax calculations
• registering for certain taxes including registering a partnership and partners for self assessment, plastic packaging tax, employment-related securities schemes
• real-time reporting of capital gains (other than the capital gains tax on UK residential property service)
• reclaim tax paid by close companies on loans to participators
• apply to payroll benefits and expenses (it was announced at Spring Budget 2023 that agents will be able to access this service in the future). 

HMRC is on record stating it wants to allow agents to see and do everything their clients can, but there are limitations to this aim. These range from resourcing issues and wrangling data from legacy systems (or getting old systems to talk to new ones) to security and regulatory issues such as the fact that only bank signatories can set up or amend direct debit mandates, which is why the new digital time-to-pay services for self assessment, VAT and employer PAYE are not available to agents.

A single sign-on portal

One aspect of HMRC’s digital services that draws particular ire from the agent community is the continued requirement for two separate agent online accounts with different login details: the newer agent services account (ASA) (through which agents manage VAT details, report clients’ capital gains tax on UK property, register a client’s estate or register a trust as an agent) and the older online services for agents account (OSAA), which covers services including self assessment, corporation tax, PAYE and the construction industry scheme.

Agents quoted in HMRC’s digital services survey earlier this year stated they “don’t really understand why they’re separate accounts” and told researchers “we didn’t know which account to sign into and the name of the services is too similar.”

While HMRC’s ultimate aim is a single agent portal, it has given no delivery timetable for this to happen. ICAEW indicated that new or updated services will be provided through the newer ASA, but due to the complexity of HMRC’s legacy systems, a full switch may take many years. 

ICAEW also highlighted the “significant scope” for digitalising and rationalising the agent registration processes. The current registration processes – at least for self assessment and corporation tax – are manual. The work is done by HMRC’s agent maintainer team and can only be contacted by writing.

No digital services available

In some cases, digital services are not available to taxpayers or agents – the most notable example being inheritance tax, although due to its relatively low volume of transactions this may be a lower priority than other taxes.

Another area where a lack of digital services is causing significant issues for taxpayers is making voluntary class 3 national insurance contribution (NIC) payments. While NIC history and contribution gaps are available in taxpayers’ PTA, payment references can only be obtained by phone. 

ICAEW states that HMRC and the Department for Work and Pensions expect to develop a fully digital service – perhaps even by the end of 2023.   

Other gaps in digital services include: 

• access to construction industry data at sub-contractor level
• submit a CT61
• request that a self assessment tax return be withdrawn.

Email communication

HMRC’s research also included the option to suggest improvements for HMRC’s digital offerings. The most popular among respondents was the ability to communicate with HMRC via a secure email link, with 81% of respondents stating this would have “a significant positive impact”.

However, ICAEW indicated that due to security concerns, a secure portal for exchanging documents with HMRC may be a more likely solution. Regardless, according to the institute, any plans HMRC might have for this are at a very early stage.

A messaging facility may feature in the single customer account and/or ASA in due course.  

Responding to the call for input from accountants, an HMRC spokesperson told AccountingWEB: "We encourage people to use our digital services wherever possible. When customers use online services, on average more than 83% are satisfied with their experience, finding them straightforward and preferring to access their information at a time and place that suits them."

Do you think ICAEW has flagged the right gaps and problems in HMRC’s digital shift? If not, what’s missing? You can let us know in the comments below, or share your thoughts with ICAEW Tax Faculty’s Caroline Miskin.

23 August 2023: This article was amended to add a quote from an HMRC spokesperson