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OTS makes practical suggestions on claims and elections

20 October 2020: The Office of Tax Simplification (OTS) has recommended improvements to tax accounts and the functionality of HMRC's online forms, alongside backing wider tax agent access to systems in its latest report. ICAEW’s Tax Faculty outlines the key suggestions.

The OTS’s latest report, Claims and elections review: Simplifying administrative processes, includes a number of practical suggestions that are very relevant to HMRC’s plan to modernise the administration of the tax system over the next decade.

The OTS highlights three areas where change would benefit the largest number of people:

  • Improvements to the functionality of personal and business tax accounts which are still somewhat limited in the services they offer and do not provide access to a number of online services that are only available from elsewhere on gov.uk. The importance of a merged, single digital account, which is in HMRC’s plans, is highlighted once more.
  • A review of the different categories and levels of employee flat-rate expense claims with a view to streamlining the number of different rates that can apply. The OTS also suggests exploring whether relief for flat-rate expenses could be incorporated within employers’ payroll processes and more review points for employee expense claims that are rolled forward.
  • Improvements to the functionality of online HMRC forms, highlighting issues that the Tax Faculty has raised previously about it not being possible to see the whole of a form before completing it and being unable to save and retrieve all types of HMRC form.

For individual taxpayers, the OTS also suggests that there is scope to improve gift aid carry back elections, capital gains tax main residence nominations and claims for additional pension tax relief.

Meanwhile, specific recommendations for businesses focus on:

  • claims for capital allowances on short life assets, 
  • elections to agree the value of fixtures,
  • a deminimis threshold for reporting corporation tax loss deduction allowance. and
  • reclaiming tax paid on loans to participators.

Recommendations on general principles include ensuring, where possible, that time limits for making a claim or election refer to tax year or accounting period end and that the time limits for amending claims and elections are consistent whether made within or outside a return.

The OTS welcomes the government’s commitment that agent access to systems is a priority. It considers that the government and HMRC should ensure that agents have access to systems and tools to ensure that they can best represent their clients.

It also argues that the government’s commitment should include a timetable for the introduction and improvement of various agent services, and introducing a facility for multiple agent recognition.