Source · Select Committees · Public Accounts Committee
Recommendation 13
13
Accepted
In December 2020 we reported that the age of HMRC’s Self Assessment system made it...
Recommendation
In December 2020 we reported that the age of HMRC’s Self Assessment system made it more difficult for HMRC to provide financial support for the self-employed. HMRC has an existing programme, Making Tax Digital, which will lead to self-employed people providing quarterly information on their expenses and income rather than a single annual tax return. HMRC recognised that it was taking longer than it would like to implement Making Tax Digital, but stressed that this was a key reform that would give it access to more real-time data on self-employment and would make it easier to include the self-employed in future schemes.19 In September 2021, HMRC announced that the introduction of Making Tax Digital for self-employed people would go back a year to 2024–45. We pressed HMRC on whether Making Tax Digital would be in place by 2024–25. It did not commit to 2024–25, saying it would be quite pressured for both it and software houses and small businesses to be ready in time and it would keep the delivery date under review.20 16 Committee of Public Accounts, Covid-19: Support for jobs, para 13 and page 6; C&AG’s Report, Implementing employment support schemes in response to the COVID-19 pandemic, Session 2019–2021, HC 862, October 2020, Figure 6; and HM Treasury, Treasury Minutes: Government responses to the Committee of Public Accounts on the Thirtieth to the Thirty-Fourth reports from Session 2019–21, CP 389, February 2021 17 C&AG’s Report, paras 11, 2.13 18 Qq 2, 72–73; HMRC, Improving the data HMRC collects from its customers, 20 July 2022, https://www.gov.uk/ government/consultations/improving-the-data-hmrc-collects-from-its-customers/improving-the-data-hmrc- collects-from-its-customers (accessed 2 December 2022) 19 Qq 35, 72; Committee of Public Accounts, Covid-19: Support for jobs, page 5 20 Qq 78–80; HMRC, Businesses get more time to prepare for digital tax changes, September 2021, https://www. gov.uk/government/news/businesses-get-more-time-to-prepare-for-digital-tax-
Government Response Summary
The government agrees with the recommendation and will prioritise collection of data on employee hours worked, dividends received from owner-managed businesses, and start/end dates of self-employment, with intentions to collect this data from April 2024. It also mentioned making Tax Digital for Income Tax, which will provide a more up-to-date data picture of the income and expenditure levels of self-employed customers.
Government Response
Accepted
HM Government
Accepted
2: PAC conclusion: Gaps and lags in HMRC’s data contributed to the schemes providing excessive support to some, while others in need were ineligible. 2: PAC recommendation: The Departments should set out, by July 2023, their priorities for obtaining data which would enable the better targeting of economic support. In doing so, they should consider how they can keep burdens on customers proportionate. 2.1 The government agrees with the Committee’s recommendation. Recommendation implemented 2.2 From July to October 2022, the government consulted on options for improving the range of data HMRC collects, uses and responsibly shares across government, to provide an accurate and up to date picture of citizens and businesses. Some options were focused on specific customer groups, such as the self-employed, whilst others proposed collecting a particular piece of information across different customer groups (e.g., occupation). 2.3 Following careful consideration of the views of respondents to the consultation, the government published a response on 27 April 2023. This set out a measured and proportionate approach to prioritising the collection of data that customers already hold, 17 including specific options that will be taken forward in a future Finance Bill with the intention to collect this data from April 2024. 2.4 The government will prioritise three options: collection of data on employee hours worked via Real Time Information PAYE reporting, dividends received from owner-managed businesses via the Self-Assessment return and start and end dates of self-employment, as set out in the consultation. The government also previously set out plans for the introduction of Making Tax Digital for Income Tax, which will provide a more up-to-date data picture of the income and expenditure levels of self-employed customers with a qualifying income of more than £50,000 per annum from 2026 and £30,000 from 2027, through quarterly updates. 2.5 The government will continue to review the data it collects to ensure future policy measures requiring economic support are effectively targeted whilst also balancing the cost of collection.