Source · National Audit Office

Investigation into the Digital Services Tax

Published: 23 Nov 2022 Recommendations: 4 Type: Value for Money NAO confirmed: 4 Department: HM Revenue and Customs

The Digital Services Tax has raised more revenue than forecast by the Government and increased the amount of UK tax paid by big digital companies. HMRC’s compliance work is ongoing and it has yet to identify any non-compliance among business groups, according to a report by the National Audit Office.

Dept: HM Revenue and Customs Topics: Business and industryDigital servicesDigital, data and technologyMoney and taxTax and revenue nao.org.uk →

Recommendations

4 items

4 accepted 4 implemented

Rec	Recommendation	Addressee	Acceptance	Implementation
1	a) HMRC should set out criteria to ensure its teams are able to consistently identify all business groups, companies and sources of revenue that are in scope for the Digital Services Tax. This could include updating guidance to DST Compliance teams to specify when, or in what circumstances, they should: ? escalate a case to additional levels of scrutiny; and ? triangulate data supporting an individual group?s tax return with other information, including the group?s contracts with other companies, management information and (where necessary) the group?s data on UK internet traffic to help understand completeness, and potentially identify additional revenue streams within groups Ref Page 10, 18 · Implemented 06/2023	HM Revenue and Customs	Accepted	Implemented ✓ NAO
2	b) HMRC should estimate the potential tax gap for DST (the difference between total theoretical tax liabilities and the amount that has been paid) separate from any HMRC calculation of the overall tax gap. For example, by comparing total revenue with macro-economic data since the COVID-19 pandemic began and data on business sectors not initially expected to be in scope for DST Ref Page 10, 18 · Implemented Summer 2023	HM Revenue and Customs	Accepted	Implemented ✓ NAO
3	c) HMRC should develop and implement a plan to identify, and raise awareness among, business groups that are unaware they may be liable for the UK DST, particularly those without a physical presence in the UK Ref Page 10, 18 · Implemented Summer 2023	HM Revenue and Customs	Accepted	Implemented ✓ NAO
4	d) HMRC should develop a contingency plan for enforcement against business groups that do not have a physical presence in the UK and fail to engage with HMRC, after exploring the available options. This could include discussions with tax authorities in other countries that operate a digital services tax and have similar interests, to ensure there is a clear pathway for enforcement Ref Page 10, 18 · Implemented Summer 2023	HM Revenue and Customs	Accepted	Implemented ✓ NAO

Public Accounts Committee follow-up

1 report

The Public Accounts Committee examined this NAO report and published its own recommendations. The government responds to PAC recommendations via Treasury Minutes.

5 Apr 2023 Public Accounts C… Forty-Fourth Report - The Digital Services Tax — 14 recommendations · parliament.uk