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HMRC to receive £200m for digital services

June 29, 2013


HMRC has announced plans to invest £200 million in an attempt to make its online services better and available to more taxpayers. It follows the government's award of £200m of additional funding to help people ‘take control of their tax affairs through their own online accounts’, in a move that will see HMRC attempt to create a taxpayer online experience  similar to internet banking. The announcement of the investment comes in the wake of a 5% cut in funding to HMRC in the Chancellor’s Spending Review earlier this week.

By April 2015, HMRC aims to have the facilities in place to allow two million individuals and five million small businesses to take control of their tax affairs online.  It is hoped that the investment will increase efficiency and growth for small businesses by reducing the amount of time taken up by bureaucracy and paperwork.  HMRC has also expressed the hope that better Digital Services will mean ‘a fairer, more level playing field’ for smaller businesses, as it will help ‘HMRC to identify the minority who seek to get around the rules.’

HMRC says that by increasing investment in online services they will be able to reduce their costs by £51 million in the 2015-16 tax year.

The new system will allow many tasks to be completed online, and will make more advice and support available to users than has previously been accessible.  Services for individuals which will be available online include: the ability to see tax codes and how they are made up; the facility to update their personal details and to report additional sources of income; an online tax payment facility; a service to handle end of year reconciliation and also resources to provide relevant online support when approaching retirement.

According to the Exchequer Secretary, David Gauke, the new online services will let people manage their tax affairs ‘as easily as they manage their bank accounts’.  He thinks that the new services will allow people to better understand taxation as they will be able to see what they are paying.  Gauke also said that businesses will benefit from increased control and flexibility over their tax affairs.

By the end of 2015-16 SMEs and, just as importantly for the accountancy profession, their agents, will be able to use the new online service to: view all their online transactions and complete more of these transactions; view a personalised homepage which will have most of the information they need; view an online calendar personalised with relevant tax alerts; get answers to their questions using ‘tailored online tools’ and also get information from other Government departments.  Business owners and agents should also be able to interact with HMRC digitally.

Lin Homer, HMRC Chief Executive, said that the investment represented ‘a huge vote of confidence in HMRC’, and that she was keen to ‘build a ground-breaking digital tax service’ using the money.  Homer said that the increase in the use of digital services represents a move by HMRC towards ‘doing business with our customers in the way they want to do it.’

The announcement is seen as part of the Government’s drive to move most of the public’s dealings with government on line. Its ‘Digital by Default’ agenda provides for all interactions with government and its agencies to be conducted online in a bit to reduce costs and improve the quality of public services. It also comes in the wake of growing criticism from the accountancy profession of the restricted access they are currently permitted by HMRC to their client’s tax affairs on line.

Following in the wake of real time reporting for PAYE, the move represents further automation of taxpayers' – or as HMRC prefers to call them “customers' ” – dealings with the UK’s tax authority. HMRC recently announced plans to close all its 218 tax enquiry centres in 2014 which helped 2.5m people with tax queries in 2012.

Speaking about the closure of its enquiry centres Chas Roy-Chowdhury, head of taxation at the ACCA, said the move was likely to affect some "very vulnerable" people.

"While we wish HMRC success in saving costs and making their brave new world …. we wonder whether the timing of this change will come to haunt them. One wonders whether this should really happen to a later and longer timetable to take account of the wide ranging changes to the tax and benefits system."

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