Is HMRC making tax more taxing for non-digital taxpayers?
Her Majesty's Revenue & Customs (HMRC) has made tax data accessible online – but how should it cater for those unable (or unwilling) to use digital services?
HM Revenue & Customs (HMRC) is one of the largest government departments, looking after over 29 million taxpayers and processing thousands of tax returns each year.
The department is now developing an online portal – the Personal Tax Account – to allow users to check all their dealings with HMRC. Taxpayers can use the Personal Tax Account to update relevant information and use private chat to talk to HMRC advisors on the department’s helpline.
Proponents - including chancellor George Osborne - have called the online platform “the end of the tax return” – but an estimated 10 million users will need assistance using the digital services, due to lack of internet access, disabilities or other problems.
The system needs to take into account who its assisted digital users are and what their needs will be, said Robin Williamson, technical director of the low incomes tax reform group for the Charted Institute of Taxation.
“It’s a spectrum – from those who have never used digital and who never will be able to; right up to those who are reasonably competent with most forms of digital, but face challenges in this particular form,” he said.
HMRC must then take into account how it will give these users access to the same service while meeting their needs – through methods such as phone calls or paper forms.
Casting off the 'digitally impaired'
Williamson referred to a tribunal case from 2013, between HMRC and the LH Bishop Electrical Company, in which LH Bishop appealed against HMRC insistence that the company filed VAT returns online, other than in exceptional circumstances.
The LH Bishop case eventually led to HMRC changing the guidelines surrounding VAT returns. Williamson drew comparisons between this case and the ongoing need to include the digitally impaired.
“The main concern of not providing proper assistance to those who can’t go digital is that those 10 million will be disenfranchised,” Williamson said.
“You will have this system which – once it’s up and running – will be able to produce, and give you access to, a lot of information about your rights and obligations for the tax system, which may not be available to those without that digital access.”
But he said Whitehall departments often make claims they intend to help such users, but fail to explain how, leading to confusion.
Problems with digital by default
HMRC is one of the largest and most heavily used government departments to have moved its services online. It trialled the Gov.uk Verify personal identification system, allowing thousands of users to file their tax return online.
This week HMRC denied the Gov.uk Verify system was causing problems for users – despite many saying they were unable to use the service, as they did not have the correct documentation needed for verification.
HMRC encourages users to attempt to use digital services first, saying they will find out in minutes whether or not they can continue and, if not, will be directed elsewhere.
But this causes problems for those unable to attempt the online services as a first port of call, and could put a strain on the department’s helplines.
“There’s always that danger that any kind of follow-through will be done online because they will lapse back into default mode,” said Williamson.
This digital by default strategy – led by the Government Digital Service (GDS) – has troubled other departments too. Earlier in 2015 the rural payments digital service – designed to provide EU subsidies to farmers – had to be withdrawn, due to poor performance just weeks before the payment deadline.
GDS identifies need for testing
GDS has highlighted the need for significant provisions and funding for HMRC to include the assisted digital user base during beta testing, as part of its latest assessment of the progress on developing the personal tax account system.
Preliminary user needs research for the personal tax account found that, although users were wary of engaging with the department, they felt they needed one single profile to assess all their tax needs.
Read more about digital by default
- MPs have slammed the government’s decision to make rural payment claims from farmers a "digital by default" service.
- Just 36% of civil servants in central government believe their departments have the skills needed to achieve a "digital by default" strategy.
Although the testing identifies a need for all of an individual’s tax services to be in one place, GDS said there was a lack of contextual and ethnographic research, "which means there may be gaps or inappropriate emphases in the user needs statements”.
The user-needs research does not cover several demographics, which could lead to the system's development neglecting the needs of assisted digital users, said GDS.
“The Personal Tax Account will link through to other HMRC ‘products’ where users can take action, for example paying tax or applying for a refund,” said the GDS report.
The GDS team’s assessment of the project found that, although several “assisted digital users” had been identified, there had not been sufficient testing to register their needs. GDS said the system needed “substantial work” to focus on the needs of this type of user.
“Due to the estimated number of assisted digital users, it’s important that this work is done promptly during development of the service,” the assessment report said.
“The plan for beta sounds reasonable, but there is a lot of work to do and the team needs to be further ahead with their understanding of assisted digital user needs for this service.”