The Office of Tax Simplification (OTS) has called for the government to consider auto enrolling all taxpayers into HMRC’s personal tax account service, after concerns that developing technology will cause individuals to lose sight of their tax obligations.
The OTS has published a discussion paper looking at the risks and challenges that tax simplification through technology poses.
The OTS says that although technology can ease the process of filing tax via HMRC’s Making Tax Digital programme, it may also create a future risk for taxpayers, as easier completion will not remove the need for individuals and businesses to understand and comply with their tax obligations.
So the OTS has called for government to look at auto enrolling all taxpayers into HMRC’s personal tax account service. This would work by enrolling 16 year olds into the service when they receive their national insurance number.
Auto enrolment into this service could empower individuals to understand tax and their own tax affairs more, the OTS suggests.
Currently the personal tax account allows individuals to:
- check income tax estimate and tax code;
- fill in, send and view a personal tax return;
- claim a tax refund;
- check and manage tax credits;
- check state pension;
- track tax forms submitted online;
- check or update Marriage Allowance;
- tell HMRC about a change of address;
- check or update benefits from work, for example company car details and medical insurance; and
- find national insurance number.
Paul Morton, OTS Tax Director, said: “Technology has transformed much of our day to day lives, in some areas almost beyond recognition. Although many tax-related activities have benefited from a digital approach we are still at the early stages of the potential transformation.
“This paper explores some of the more difficult questions that new technology presents. It is important that some of these areas are addressed sooner rather than later and we hope our paper will encourage this.”
The OTS’ report suggests the following key points for the government to consider:
- HMRC expanding the current personal tax account to deliver better targeted guidance alongside looking at automatically enrolling all taxpayers into this service;
- how to mitigate the risk of taxpayers losing sight of their obligations through the use of technology;
- continuing to monitor private sector technological innovation with the potential to improve taxpayers’ experience of managing their tax affairs;
- the potential for using new technology to engage with the public more efficiently and effectively while saving resources;
- monitoring the impact of the General Data Protection Regulation (GDPR) on taxpayer choices for security and privacy, and convenience; and
- active monitoring of the impact of moves towards a cashless society and risks of digital exclusion.
The OTS says it 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.