As part of a £1.3bn investment to transform HMRC into one of the most digitally advanced tax administrations in the world, HMRC have published a report and discussion paper setting out how new procedures for interacting with HMRC and paying tax will be implemented under the Making Tax Digital banner.
It is intended that by April 2016, every individual and small business will have access to their own secure digital tax account that enables them to interact with HMRC digitally. By 2020, businesses and individual taxpayers will be able to register, file, pay and update their information at any time of the day or night, and at any point in the year, to suit them. For the vast majority, there will be no need to fill in an annual tax return.
The government is also to consult on the issue of payment – on options to simplify the payment of taxes, align payment arrangements and bring payment dates closer to the time of the activity or transactions generating the tax liability. HMRC will be running a series of consultation events in January and February 2016 to discuss these issues with stakeholders.
The Making Tax Digital project has also presented the opportunity to align payment arrangements across different taxes and to provide a more joined-up service for taxpayers. The government has already brought the collection of Class 2 National Insurance Contributions (NICs) for the self-employed into the arrangements for self-assessment, which means that from April 2015, Class 2 NICs are being collected alongside Class 4 NICs for most. The government is also consulting on the abolition of Class 2 NICs and reform of Class 4 to further simplify the system (see www.gov.uk/government/consultations/consultation-on-abolishing-class-2-national-insurance-and-introducing-a-contributory-benefit-test-to-class-4-national-insurance-for-the-self-employed/the-abolition-of-class-2-national-insurance-introducing-a-benefit-test-into-class-4-national-insurance-for-the-self-employed for further details).
HMRC have now officially launched Personal Tax Accounts (PTAs), which enable UK taxpayers to manage their tax affairs online. More than a million customers completing their self-assessment electronically will be directed to their online PTA which will:
- provide a clear and joined-up view of the tax they pay and benefits they are entitled to;
- enable customers to update their tax details as they occur in real time, removing the need to resubmit information; and
- make it easier and more efficient to contact HMRC officials through services like web chat and virtual assistant.
Between now and May 2016 HMRC will continue to add new services to the PTA, including:
- improvements to the ‘Check your tax estimate service’ so customers can look a year ahead and back on their current, future and previous tax position;
- a new online payment and repayment service;
- expanding the opportunity for non-self-assessment customers to choose to stop receiving paper from HMRC;
- integration of the tax credits online service in time for 2016 renewals;
- introducing change of circumstances for the marriage allowance service; and
- introduction of the new national insurance/state pension service.
Further information on the Making Tax Digital project can be found at www.gov.uk/government/publications/making-tax-digital.