Source · Select Committees · Public Accounts Committee
Recommendation 2
2
The age of the Self Assessment system made it more difficult for HMRC to provide...
Conclusion
The age of the Self Assessment system made it more difficult for HMRC to provide financial support for the self-employed. Its tax system for the self-employed lags behind that available in other countries. The Self Assessment system was built in the 1990s, and its design and age limits the amount, timeliness and quality of the data that HMRC holds on the self-employed. HMRC had to cleanse the data in the system before it could use it, adding several weeks delay to introducing the SEISS. HMRC has an ongoing programme, Making Tax Digital, designed to upgrade its systems and permit users to provide information more frequently using digital devices—as opposed to the current annual tax return. Making Tax Digital should have been in place by 2019 but, apart from a pilot project, is now not due until 2023. By contrast, HMRC’s investment in the Real Time Information system in 2013 gave HMRC access to much more timely data about employees on the Pay-As-You-Earn system. Therefore, it was able to use this for the design of CJRS and base eligibility on more up-to-date information. Recommendation: HMRC should write to the Committee within three months to explain what it has learnt from its review of other countries’ self-employed systems and how it will apply these to its plans for delivering the Making Tax Digital programme.
Government Response
Not Addressed
HM Government
Not Addressed
2: PAC conclusion: The age of the Self-Assessment system made it more difficult for HMRC to provide financial support for the self-employed. 2: PAC recommendation: HMRC should write to the Committee within three months to explain what it has learnt from its review of other countries’ self-employed systems and how it will apply these to its plans for delivering the Making Tax Digital programme. 2.1 The government agrees with the Committee’s recommendation. Target implementation date: March 2021 2.2 HMRC recognises the value in learning from other countries’ experiences, and in ensuring that these insights are deployed in the design and implementation of Making Tax Digital (MTD) and the wider tax system. The department considered these insights in designing and implementing MTD. This includes the pre-population of tax returns, prompts and nudges in software, and benchmarking. 2.3 HMRC continues to work closely with the Organisation for Economic Co-operation and Development (OECD) to enhance its understanding of the international landscape. COVID-19 reinforced the need for more flexible, resilient and responsive tax administration system. The HMRC and HMT 10-year Tax Administration Strategy sets out the departments’ commitments to build a trusted, modern tax administration system that works closer to real time and is better able to respond to national crises. As part of this, the departments have set out a future roadmap for MTD which provides those within scope with time to make the necessary preparations. 2.4 The 10-year strategy includes extending MTD and increasing use of real-time information to give customers and HMRC a more up-to-date understanding of and certainty over a customer’s position. 2.5 As set out in the Tax Administration Strategy, the government intends to publish a call for evidence on real time reporting and payments of tax that will provide a signpost for future changes in this area.