Source · Select Committees · Public Accounts Committee
Recommendation 12
12
Rejected
HMRC targets real-time record keeping, but stakeholders question quarterly updates' usefulness.
Conclusion
We asked HMRC to explain what exactly it was aiming for with the introduction of quarterly updates through digital record keeping, given it was a source of concern for its stakeholders. HMRC said its aim was for customers to keep records in near real-time to help close the tax gap. It explained that there can be up to 21 months between a transaction occurring and a taxpayer needing to report that to HMRC as part of their self-assessment return, which was in part why the tax gap existed. HMRC said it was looking to see if it can take out steps, but its overriding aim was to have taxpayers’ submissions and updates happen at the same time to allow it to have information as close to real-time as possible.29 However, stakeholders including the Association of Accounting Technicians and the Institute of Charted Accounts England and Wales wrote to us to express their concerns over the reliability and usefulness of quarterly updates, such as how far this will help businesses in forecasting tax liabilities, particularly those with seasonal trading patterns.30
Government Response Summary
The government rejects the committee's observation regarding the aim of quarterly updates, reiterating its priority is to make tax easy while balancing revenue raising and tackling the tax gap. It details continuous engagement with taxpayer representatives and improved internal processes for considering taxpayer experience.
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).