Source · Select Committees · Public Accounts Committee
Recommendation 3
3
Rejected
Ensure future digital tax system proposals demonstrably prioritise taxpayer needs and provide improvements.
Conclusion
HMRC’s design of Making Tax Digital has not taken sufficient account of the realities facing business taxpayers and agents. HMRC’s key aim for the programme is to make it easier for taxpayers to get their tax right and help reduce the amount of tax lost due to errors. While Making Tax Digital will substantially benefit HMRC by improving its systems, taxpayers will be asked to spend more and do more to comply. HMRC has lost sight of its original aim to reduce the burden on taxpayers and is increasing the burdens it imposes by asking Self Assessment taxpayers to pay for third party software and file tax returns quarterly. Many stakeholders, including tax experts and software developers, report that up until 2023 HMRC had ignored their advice, including on what the programme needs to do to work for taxpayers. HMRC has increased its engagement with these stakeholders, but this only started in early 2023. Some stakeholders remain concerned about the engagement from HMRC on the design of the Self Assessment system and the impact on customers. Recommendation 3a: In addition to Making Tax Digital, HMRC should research what services customers would find most helpful, drawing on customer views as well as international research, and publish its findings by Autumn 2024. b) HMRC should ensure that all its future proposals for digitalising the tax system: start with what taxpayers need; are demonstrably better for them than existing arrangements; and the plans are supported and therefore can be championed by taxpayer representatives, including its own Administrative Burdens Advisory Board.
Government Response Summary
The government disagreed with the recommendation, explaining that while a priority is to make tax easy, they already engage extensively with taxpayer representatives (ABAB, expert panel, Customer Experience Committee) and conduct research to understand customer needs, publishing findings in TIINs.
Government Response
Rejected
HM Government
Rejected
The government disagrees with the Committee’s recommendation. A priority for government is to make it easy for taxpayers to get tax right. However, it needs to balance several objectives for the tax system, including raising revenue and tackling the tax gap. While these often align, there can be trade-offs to consider. HMRC regularly engages a range of taxpayer representatives, including the Administrative Burdens Advisory Board (ABAB), as new services are developed and to better understand issues faced by taxpayers. ABAB provides valuable insight, including on MTD for ITSA, where its views were important in informing the announcements made in the 2023 Autumn Statement. HMRC has also established an expert panel to consult on digital improvement ideas which provides insight into how to implement changes and provide the right support for vulnerable or digitally excluded customers. As part of HMRC’s governance, the Customer Experience Committee, which includes independent expert advisers, provides advice on customer-experience issues. HMRC shares plans for digital improvements with this committee. The government has recently enhanced existing processes which support policy and service delivery, ensuring these consider improving taxpayers’ experience. This includes improving training and internal guidance for policy officials; introducing checkpoints in the policy making process where senior officials review measures from a simplification and customer experience perspective; and ensuring advice to ministers sets out how a measure contributes to making the tax system simpler, fairer or supports growth. HMRC also runs research programmes to build understanding of customer needs, publishing analyses of impacts on individuals and businesses in Tax Information and Impact Notes (TIINs).