The Budget included confirmation that the Government will take forward measures aimed at preventing employment intermediaries abusing the rules relating to travel and subsistence expenses for temporary workers. The announcement of the roll out of a digital tax account for individuals and small businesses, which claims to herald the end of the paper tax return, was not accompanied by any further detail on the promised post-implementation review of RTI. Any new system will only be as good as the data it contains, and with some employers experiencing ongoing difficulties with RTI which take many months to resolve, this seems a missed opportunity to improve the quality of HMRC’s data before the digital account rollout begins.
Although employers have been reporting under RTI for more than a year now, the promised benefits in terms of PAYE being more accurate, tax collection being more efficient and contact between HMRC and taxpayers being reduced, have not yet materialised. The Government has accepted the Office of Tax Simplification’s recommendations for a post-implementation review of RTI: the Budget might give us more information on what that review might cover. We would hope that the review would cover areas such as:
The Office of Tax Simplification is carrying out a review of the issues around determining whether an individual is employed or self-employed for tax purposes. It is due to report its findings at the end of February and in recent consultative committee minutes noted it expects an initial response from the Government in the Budget. We would expect that any substantive action in this area will have to wait until the next Parliament, but as the OTS themselves have said, their report may form the basis of a “long term agenda for exploring simplification”.
Further simplification of employment taxes
Following an OTS review, the Government set out some changes to the tax treatment of expenses and benefits in the Autumn Statement. The Budget might see more developments: possibly consultation on the OTS’s recommendations on short-term business visitors, termination payments and accommodation benefits. Again however, the upcoming election means that we are unlikely to see any firm commitment to take action until the next Parliament.
This article represents the views of the author only, and does not necessarily represent the views or professional advice of KPMG in the UK.