We can expect to see a great many changes to taxation management by 2020. There are two key changes HMRC wishes to drive into the current tax system; making tax digital and simple. This blog focuses on how HMRC plans to make tax simple by 2020, to see how tax will be made digital by 2020, click here.
In the past and at present, taxpayers often find themselves reporting information to HMRC, information that HMRC already has, or should be able to get from elsewhere. This is time consuming, inefficient, and frankly annoying for the taxpayer.
By 2020, HMRC will be able to obtain the information they need from employers, banks, building societies, and other government departments. Taxpayers will be able to view the information that HMRC holds on them through their digital tax accounts. From their tax accounts, taxpayers will be able to easily check the details and update HMRC if necessary.
At the moment, the information HMRC receives comes from a variety of sources, this is held on separate, stand-alone systems. Work is now underway to change this; HMRC is joining up its internal systems. This means information that is already held on any of the HMRC systems will all be merged into one place.
In the next five years, all taxpayers will be able to use their digital tax accounts to see a single, up-to-date and easy to follow overview of their tax affairs. At present, many taxpayers have to contact different HMRC departments to find out their financial position for each type of tax they pay. For example, a business may pay income tax, VAT, Corporation Tax or National Insurance. The business would have to contact each department individually, and to make matters worse, the business owner could be subject to a number of their own taxes. Individuals may have to pay income tax, National Insurance contributions, repay student loans etc.
As you can see, finding out your financial position can be difficult, particularly for those who are employed and run their own business. This all-in-one overview – or dashboard – will make it much easier for taxpayers to see the payments they have made to HMRC.
As mentioned earlier, in order for HMRC to deliver these changes, it needs to completely reconfigure the infrastructure of its internal systems. While work is already underway, the logistics of doing this mean it may be a while until HMRC’s aims are fully achieved. Nevertheless, the eventual outcome will make life significantly easier for the taxpayer.
To view a timeline (infographic) showing the points discussed in this article, click here.
If you have any concerns or questions about any of the above, please leave a comment and we will respond as quickly as possible.