HMRC’s plans to shift individuals from paper tax returns to an online portal and moving from annual to quarterly reporting is a significant task, and a real test for a new incoming HMRC CEO. As Neil Lagden, Managing Director, Bond Payroll Services, insists, the first phase of digitisation at the HMRC is critical – get it wrong and the longer term objectives of centralisation of HMRC offices may make the change unworkable.
Digital Revenue
The end of the personal tax return – announced by HMRC in December – will mark the beginning of a period of significant change in the way both businesses and consumers interact with the revenue. With every individual and small business set to have access to their own secure digital tax account by April this year, the HMRC is creating a new portal style approach, similar to an online bank account.
The portal will house all items related to an individual’s tax return, providing insight into how much tax is owed, how much rebate is due and payment deadlines. HMRC’s comparison of these digital accounts to online bank accounts is an interesting one. Without doubt online banking has become increasingly dominant over the past decade – but it took time for confidence to grow and both businesses and consumers still rely on the other channels of interaction via branch and telephone. So how will the digitisation of personal tax accounts be accepted by individuals? And is HMRC geared up to manage the queries raised during the transition?
Last year’s damning report into HMRC’s customer service was no surprise to many organisations struggling to get answers to payroll queries or resolve errors. The government commissioned report stated that the department’s customer service posed ‘a genuine threat to tax collection’ and it is clear that already overburdened customer service desks may struggle under the weight of any additional queries. For Payroll Departments getting answers to business payroll queries may continue to be a very real problem.
The changes are not only the shift from paper to digital – the model is changing fundamentally. From April 2018 businesses – including the self-employed and landlords – will have to update HMRC every quarter if this activity is the main source of income. That obligation to report quarterly will also apply where the money is a secondary source of income worth more than £10,000, and the main income is from employment or from a pension – adopting the quarterly rather than annual approach will without doubt cause confusion to some.
While the roll-out for individuals is being phased in for people currently in the self-assessment system, by April all personal taxpayers will have personal accounts, as will all of the country’s five million small businesses – although two million businesses are already using the new system. This transition, which will eventually mark the end of the annual tax return for most tax payers, is significant and is likely to put pressure on already overstretched HMRC call centres.
This introduction is the beginning – indeed the precursor – to the massive shake-up planned by HMRC. The entire tax system will be digitised and 137 regional offices are set to be replaced with thirteen regional centres over the next few years, although timing is yet to be confirmed. And without doubt, companies will be looking closely at the success – or not – of the personal digitisation introduction and hoping it spells an improvement in HMRC service delivery.
This personal digital roll out is, therefore, something of a test case for the significant changes to come.