HMRC ramps up digital tax plans

Open to open source

HMRC is a firm believer in open source suppliers and making it easier for small and medium-sized suppliers to gain foothold, according to McBride.  

“We’re committed to opening up the market to new suppliers and removing the cost for them to develop apps and software,” she said.  

“Big software organisations are like big government organsiations in that they need to cover a whole range, and smaller suppliers and open source providers can be more bespoke.”  

For instance, if you support smaller and open source providers, you can get software tailored to self-employed farmers.

HMRC received £1.3bn as part of 2015’s spending review towards making tax digital.

While the roll-out of digital tax accounts for businesses isn’t due to be fully completed until 2020, HMRC is beginning private beta testing with a small group of customers in December 2016.

“It’ll be very controlled access before we go into public beta in April 2017 for a wider group of volunteers,” McBride said, giving the department time to “wring out the creases and make sure it all works” before April 2018, when the majority of businesses will switch to the digital system.

As part of the consultations launch, HMRC confirmed that small businesses won’t need to update HMRC quarterly, but will be able to make voluntary payments through a pay-as-you-go system.

The government is also considering deferring digital record-keeping and quarterly updating for a further group of small businesses, the threshold of which is yet to be decided, until April 2019. The end goal is that, by 2020, all eligable businesses will use digital tax accounts.

Offering a helping hand 

Government, and HMRC specifically, is currently working towards having an assisted digital offering, as HMRC did with the roll-out of personal digital tax accounts that went live in 2015.

HMRC will offer help getting online through call centres, web chats, webinars, instant messaging and the trusted helper service.

“The trusted helper service means a family member or a friend can help up to five people with their tax. It’s not a one size fits all. Some might turn to family members, while others prefer calling our call centre, using a web chat or a tax agent,” said McBride.

The consultations on digital tax accounts for businesses will run until November 2016.

Commenting on the launch of the consultations, Jane Ellison, financial secretary to the treasury, said: “By replacing the annual tax return with simple, digital updates, businesses will be able to concentrate on putting people and profit, not paperwork, first.” 

In July 2016, the National Audit Office (NAO) called on HMRC to assess how moving to a digital tax system would affect customers. NAO said the department had failed to estimate “the costs for individual taxpayers or businesses of making the transition to online services, or sought to quantify the benefits they can expect”.

“Most business customers will have to update HMRC quarterly, rather than annually, about their tax affairs. They may need to buy software that works with the systems. The business community is sceptical of HMRC’s evaluations of the costs and benefits of previous changes to the tax system,” the report said.