HMRC have published a response to their consultation ‘Making Tax Digital: Transforming the tax system through the better use of information’.
The original consultation focused on how HMRC could make more effective use of third party information under Making Tax Digital (MTD). This includes information from employers, banks, pensions providers and other government departments.
In their response HMRC confirm that, under MTD:
- HMRC will use third party information it already collects more effectively, with the aim of reducing under and over-payments, for example:
- In 2017 they will start to use PAYE information during the tax year to calculate whether the right amount of tax is being paid.
- They continue to trial designs for making better use of bank data, including changing tax codes where interest earnings exceed the personal savings allowance.
- When information is sent to HMRC for inclusion in a digital account the third party will have to inform the taxpayer.
- HMRC will not alter information received from third parties, and taxpayers will not be able to either.
- If a taxpayer agrees with the source of income (e.g. a particular bank account) but not the amount they will have to take this up with the third party.
- Some third party providers may be asked to provide information more than once a year.
- There will be further consultations before any new third party information providers are added, and HMRC will seek to make better use of information they already hold first.
Links
Our guides:
HMRC’s consultation documents can be found here
