In this consultation, HMRC are proposing to use third party information more effectively to make compliance easier for taxpayers. Typical third parties in this context are banks, building societies and pension providers. The proposal is to gain access to third party information so that tax can then be calculated with less involvement from the taxpayer. The overall aim is to eliminate any over or under payments of tax and ensure the personal allowance is being used effectively.
The overarching principles of this consultation are as follows:
- Taxpayers will never have to tell HMRC information it already has;
- HMRC will use third party information it already collects more effectively to reduce under and over payments that can be a source of frustration and confusion for taxpayers;
- HMRC will enable taxpayers to report more information about their income digitally through their digital tax account, in closer to real time, rather than through an annual tax return;
- HMRC will use third party information, information provided by taxpayers through software, and information provided by taxpayers directly into their digital tax accounts, to calculate tax due;
- Digital tax accounts will give all taxpayers a single, personalised view of their tax position across all of their liabilities and entitlements, making it easier for taxpayers (and their tax agent if they have one) to see and understand their overall tax position, showing a complete and up to date picture of what will be due when, and what action, if any, taxpayers need to take;
- Taxpayers will be offered a range of modern payment options, including the option to ‘pay as you go’, through their digital tax accounts;
- Over time, HMRC will look to extend the range of third party information providers where this reduces the reporting burden on taxpayers
By 2020 HMRC are hoping to be able to obtain information on shares and dividends as well as property income so that it pre-populates the digital tax account. The intention is that for most taxpayers, their role will become one of reviewing information already contained in their digital tax account and ensuring it is correct.
The closing date for responses to this consultation is 7 November 2016.
Please contact us using the details below if you would like any further information on this consultation or our response.
Tel: +44 20 73115709
Tel: +44 20 73114330