The Office of Tax Simplification (OTS) have published “Tecnhology Review: a vision for tax simplicity”, to consider how to use technology to achieve a simpler and better “user experience” without taking away taxpayer understanding and responsibility for their tax affairs.
Admitting that 'the likelihood of any effective, wholesale reform of the current tax code seems a distant and difficult objective'.The paper focusses on how to use technology to simplify taxpayers’ interaction with the tax rules rather than how to simplify the rules, by understanding the experience and needs of the taxpayers who use the technology.
The OTS has identified six key actions which they believe the government should consider, alongside and beyond the introduction of Making Tax Digital :
- how to mitigate the risk that taxpayers lose sight of their obligations through the use of technology.
- continuing to monitor private sector technological innovation and that of other countries, to enhance the taxpayer experience in managing their tax affairs.
- the potential for applying new technology to engage with the public to deliver efficiency and cost savings.
- monitoring the impact of GDPR on taxpayer choices regarding security, privacy and convenience.
- enhancing HMRC’s current personal tax account to deliver more targeted guidance and information and give people more ownership and understanding of their tax affairs.
- active monitoring of the impact of moves towards a cashless society, how it can reduce the tax gap, risks of digital exclusion and the cost for small businesses.
They have also raised the question of individuals:
- having a single identification number which provides access to various government records, e.g. tax, health and driving records, using blockchain technology to manage access, privacy and security risks.
- Being automatically issued a personal tax account at age 16 as well as an NI number.
The report makes particular mention of the tax system in South Korea as “one of the most impressive digitised tax services in the world”, which has reportedly reduced tax compliance costs by £5bn and resulted in 80% of VAT returns, 90% of individual income tax returns and 97% of corporate income tax returns now being completed online.
Next steps:
The OTS will continue to look into the role of technology in tax simplification, and will look to:
- Gather further evidence of the role of technology and public perceptions of it through the publication of an online survey in due course
- Publish a follow up to the paper published in July 2018 on the platform economy, considering in more detail the concept of introducing withholding tax regimes for the self employed in the platform economy.
Comment
Interestingly HMRC survey results show that those who are most digitally active, being 16-24 year olds, were the most likely to contact HMRC by methods other than the online system; it seems that current HMRC online systems are not answering the questions and concerns of even the most technologically savvy taxpayers!
Useful guides:
Making Tax Digital: Index and timeline
Making Tax Digital: Accountants' Toolkit
Making VAT Digital: who has to join
Test out new tax tools: The TAAR tool
External links: