ICAS urges the UK Government to improve tax administration in ten key areas
ICAS has published a new report, Tomorrow’s Tax Administration, setting out its top ten priorities for UK Government action to improve tax administration.
Why does tax administration matter?
Good tax administration is essential, even though it may not feature at the top of many political wish lists. It has a role to play in fulfilling the UK Government’s ambition for an open, business-friendly economy post-Brexit. If society as a whole does not trust the tax system because it does not function properly, voluntary compliance is undermined and the consequences for government revenues are serious.
The government needs tax administration to work effectively, to deliver the money it needs to pay for COVID recovery and to fund ambitious initiatives around tackling climate change and levelling up.
What are the problems with UK tax administration?
Based on our Members’ experience – working in business and as agents – a more effective and taxpayer-friendly tax administration should be an urgent priority for the government.
HMRC’s functions have expanded beyond ‘pure’ tax in recent years but its resources have not kept pace and are insufficient to cover all its responsibilities adequately, even in ‘normal’ times. Events, such as Brexit or the pandemic, rapidly lead to significant problems with service levels. Funding for the digital systems required to modernise the tax system in a way that works for taxpayers has also been inadequate.
In July 2020, the government published its ten-year strategy for creating a tax system ‘fit for the challenges and opportunities of the 21st century. ICAS is broadly supportive of the three key strands of work which make up the strategy: The extension of Making Tax Digital, exploring tax payment mechanisms and reform of the tax administration framework. However, timely delivery will be critical; this will require the provision of adequate HMRC resources and the funding to build an integrated digital tax infrastructure.
The ten-year strategy is about the future but there is an immediate need to address the poor service levels, patchy digital systems and problems which cause issues for taxpayers and agents on a day-to-day level. Pushing ahead with major, complex projects, like Making Tax Digital, whilst failing to ensure that basic tax administration works properly for everyone who has to engage with it, is unacceptable and will not deliver what the government or taxpayers need.
The ICAS top ten priorities
In Tomorrow’s Tax Administration ICAS calls for actions in ten areas, to address problems which impede the smooth running of tax administration. Additional commentary can be found on the ICAS website, but the headlines are:
Powers and safeguards – striking the right balance
We call for an independent review of the overall balance between HMRC powers and taxpayer safeguards.
Facilitating the work of agents in supporting their clients
Agents play a crucial role in helping taxpayers meet their tax obligations. We call for agent access to be built into all HMRC forms and systems from the start, with agents having access at the same time as taxpayers.
Supporting high standards for all agents
We call for a long-term objective to ensure that all agents belong to one of the main professional bodies which require Members to comply with a range of professional standards.
Swift access to the right HMRC support and expertise
We call for properly resourced HMRC helplines, webchat and online forums; staff must be adequately trained and able to deal quickly, efficiently and consistently with routine questions and issues.
Meeting the standards set out in the new HMRC Charter
We call for parliamentary oversight of HMRC’s performance against the standards set out in the charter, as part of the process for holding HMRC to account and improving service levels for taxpayers.
Making Tax Digital – making it work for businesses
We call for effective implementation of future stages of Making Tax Digital for business income tax and corporation tax, to ensure that MTD delivers for businesses as well as HMRC.
Personal income tax – roadmap required
We call for a clear roadmap setting out short, medium and long-term plans for the development of personal income tax administration and digitalisation – and proper communications to taxpayers.
Support and access for the digitally excluded and digitally challenged
We call for changes to ensure that tax administration works for all taxpayers – including the digitally excluded and digitally challenged, and for those who simply want to appoint an agent to act for them.
A user-friendly legislative framework
We call for a new Taxes Management Act to bring all the main tax administration legislation together in one place.
Tax simplification
We call for a comprehensive government policy on tax simplification setting out the level of importance government attaches to simplification and the methods it would use to implement that policy.