Digital tax system must be inclusive
19 October: The road to enable agents to see and do everything their MTD clients can before April 2023 is under construction says Roy Wallace, HMRC’s Director of Making Tax Digital.
On Wednesday 21 October, Wallace is joining four other tax industry experts at the Tax Faculty’s Wyman Symposium, which this year discusses the impact of digital technologies on the administration of tax and what the future should look like.
Ahead of the event, which this year is digital and open for all to attend, Wallace talked to ICAEW Insights about HMRC’s vision of a digital tax system and reflected on the progress being made through the Making Tax Digital (MTD) programme.
The coronavirus pandemic’s impact on the uptake of digital technologies has helped to strengthen the case for MTD he says, but that doesn’t mean all taxpayers are ready for a digitalised tax system.
“Undoubtedly, more businesses have turned to digital tools and experienced the significant benefits those tools can bring, whether in terms of productivity or freeing up time,” he says. “But that doesn’t mean we should get complacent about costs, nor be cavalier in our attitude towards businesses transitioning to MTD. For many businesses, this still means significant change.”
An important part of the work for MTD for income tax self assessment (ITSA), which will be mandated from April 2023, is working with software providers to ensure that businesses needing to update their accounting systems have access to affordable software products, offering different levels of functionality.
“That includes free software for the simplest of businesses, bridging software for those who want to continue to use spreadsheets for record-keeping, as well as fully integrated accounting software that provides additional functionality to help users to better understand and plan for their business,” explains Wallace.
Single tax account
Alongside action to ensure that appropriate software solutions exist, HMRC’s vision is a digital tax system that is easy to engage with and at the heart of this is the goal of a single account through which business and personal tax can be managed.
“Ensuring that all taxpayers have access to a fully complete, single account containing all taxes and duties is one of our core long-term ambitions,” confirms Wallace. However, he also acknowledges that turning this goal into a reality is going to take several years and several phases.
“We will take an iterative approach to delivery, addressing the biggest pain points for customers first,” he explains. “We know from the wealth of evidence we have gathered that income tax and its relationship with business tax accounts and personal tax accounts is one such pain point, and it will therefore be one of our earlier services to develop.”
Tax agents
Wallace also acknowledges the role that tax agents play in the smooth running of the tax system and the importance of creating a system in which they can fully participate on behalf of their clients.
“The HMRC and HMT 10-year tax administration strategy, ‘Building a trusted, modern tax administration system’, reaffirms our commitment to improving services for agents and representatives. This includes designing in access to services from the start and ensuring agents can see and do what their clients can,” he says.
Wallace explains that as the MTD programme expands the offering via the Agent Services Account will expand too. “We will be opening further services to agents enabling them to see and do all their MTD clients can before April 2023.”
Wyman Symposium: 17:30-19:00, 21 October 2020
In a virtual event, the expert panel will provide their own perspectives on what a good digital tax system and administration should look like, and then participate in a live Q&A session with questions from the online audience.
Roy Wallace will be joined by:
- Louise Dunstan Rice, Deputy Director Strategy at HMRC
- Jane McCormick, formerly of KPMG, will give the view of large business and international taxpayers.
- Paul Aplin, past president of ICAEW and AC Mole partner (retired), will be looking at developments from a small business perspective.
- Gary Turner, MD and co-founder of Xero, will be giving the software suppliers’ take.