HMRC have released a call for evidence, 'Income Tax Self Assessment (ITSA) registration for the self-employed and landlords'. It seeks views on the case for reforming the registration process for ITSA for individuals with those sources of income.
At a glance
The call for evidence is seeking views on the initial interactions between individuals who are self-employed or are in receipt of rental income and HMRC and follows earlier calls for evidence entitled ‘The tax administration framework: supporting a 21st century tax system’ and ‘Timely payment’.
The aim is to understand whether:
- Bringing forward the point at which taxpayers are required to identify themselves to HMRC will help taxpayers stay on top of their tax affairs.
- Changes could help create a more efficient tax system that gives taxpayers clarity on their obligations.
- Earlier registration could lead to earlier entitlement to additional benefits.
- The benefits of Making Tax Digital could be accessed sooner.
The hypothetical changes to the registration system on which views are sought include:
- Reducing the notification deadline to two, three or four months after the tax year end.
- Changing the obligation to notify based on commencement of the income source rather than the tax year.
- Notification based on a turnover threshold.
- Whether third party data could be used to increase awareness of obligations.
- Encouraging use of digital record keeping and integration with tax reporting.
- Increased online interaction with taxpayers.
Useful guides on this topic
New business: Sole trader compliance checklist
Starting in business? A new business registration checklist.
Call for Evidence: Tax Administration Framework
The call for evidence seeks views on how the tax administration framework could be reformed to provide a better experience for individuals and businesses with a view of reducing the tax gap and providing flexibility to adapt.
Call for Evidence: Timely payment
HMRC have opened a new call for evidence about the timely payment of Corporation Tax by small companies, and Income Tax. It seeks views on the opportunities and challenges of introducing in-year calculation and payment of these taxes.
Summary of call for evidence questions
Question 1 – How simple and well understood are the current legislation and processes for notifying liability and registering for ITSA? What are the benefits and/or drawbacks of the current system?
Question 2 – If you have experienced registration processes across different UK taxes or internationally please tell us more about how they compare. What works well and what could be better?
Question 3 - What are your experiences of closing an ITSA record of self-employment or property income? Is it easy to understand and complete?
Question 4 – What difficulties do taxpayers new to ITSA face in complying with their obligation to notify liability? What are the causes of these issues?
Question 5 – How do customers new to self-employment or property income learn about the ITSA registration process and associated tax obligations? What are the issues with this?
Question 6– What challenges do taxpayers experience as a result of the delay between a business starting and the deadline for notification?
Question 7 – Are taxpayers clear on what trading is, and when they started or stopped trading? What factors about trading make it difficult to decide whether or not to register?
Question 8 - What are taxpayers’ experiences of interacting with different government departments when starting self-employment?
Question 9 – Do you agree that chapter 3 sets out the challenges presented by the current registration system? Are there others?
Question 10 – Are these the right options for changing the obligation? Which is better? Are there others?
Question 11 - What is the right period after the start of the new self-employment or property income for the obligation to be triggered?
Question 12 - Do these ideas for using intermediaries and third party data to improve tax registration merit further exploration? Are there others?