ICAEW’s Tax Faculty has, in its response ICAEW REP 85/22 to HMRC’s data collection consultation, expressed the view that HMRC should concentrate on improving its core function rather than dissipating scarce resources to collect data that is not required for the assessment of tax. HMRC’s overriding priority should be to improve its customer service so that the tax system works efficiently.
If the data collection proposals are to be taken forward, HMRC needs to be clear:
- whether making taxpayers ascertain and report additional non-tax data will help businesses grow and deliver simplification; and
- why it needs additional data and who it will be shared with.
Data protection legal requirements must also be met.
The consultation envisages taxpayers undertaking a lot of work to provide data that may be of little value to HMRC. The data is unlikely to be sufficiently accurate or granular to enable accurate analysis.
The Improving the data HMRC collects from its customers consultation proposes that employers should submit additional data via PAYE real time information (RTI) on employee occupations, locations and hours worked. HMRC appears to assume that this data is readily available. This is not the case. Obtaining the data would be expensive and create considerable burdens and expense for employers. PAYE RTI is therefore not the appropriate means to report the proposed additional employee data.
The Tax Faculty agrees that data on self-employment business location, sector, occupation, start and end dates, and close company dividends, would be best collected through the income tax self assessment return. However, this should be in a more simplified manner than by way of standard industrial classification (SIC) codes and standard occupational classification (SOC) codes.
In all cases, the additional costs to taxpayers of setting up new procedures for collecting and reporting the required data need to be ascertained before the consultation proposals are taken forward.
If tax returns are to be used to collect data that is not required to assess a tax liability, the law needs changing to provide legal vires.
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