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HMRC, Companies House and collaboration across government

Author: ICAEW Insights

Published: 01 Oct 2021

Achieving efficiencies across government departments is to be applauded. Mark Chandler, Advisory Accountant at HMRC talks to ICAEW Insights about how collaboration is being achieved with Companies House and other UK Government departments.

“It’s about being more efficient from a cost perspective, reducing customer burden and adding value as well,” says Chandler. “This includes combating fraud, enhancing compliance, and helping people get it right the first time.” Achieving these efficiencies has been set out in a Companies House blog.

“The two chief executives of HMRC and Companies House asked us to form a close working group with the aim of adding value to both departments’ activities. We identified a number of work strands where we thought we could make a difference. That evolved into working really closely with Companies House on their joint consultation with the Department for Business Energy and Industrial Strategy’s (BEIS’s) on Corporate Transparency and Register Reform,” he says.

“We use the term ‘upstream working’. If the accounts that are filed with both HMRC and Companies House are as good, robust and free of fraud and error as possible, that saves costs further down the line – for both the business and for government. We’re very happy to work closely with BEIS and Companies House on that, as they work towards more robust systems, greater powers and enhanced compliance functions.”

The reduction in costs is not only an advantage to HMRC, but also to the companies themselves. “The emphasis on more robust controls, and identity verification, should enable greater access and greater usability by businesses and their agents. So, it should be a better customer experience, as well as an overall cost-saving from doing things more upfront, and not waiting until problems occur further down the line,” says Chandler.

There is also an initiative – linked to our 10-year tax administration strategy – to make better use of data. “So, having started this ‘closer working project’, we've then built better networks through that project across government. We've had a series of collaborative meetings – which have proved to be very productive – on how to share data better across government. Those meetings started off with Companies House and BEIS, and now include the Cabinet Office, the Department for Digital, Culture, Media and Sport and the Financial Reporting Council.” 

“We're identifying more ways in which we can better exchange data within the existing legal frameworks. And we are seeking to change legal frameworks where we don't have common solutions to improve data-sharing across government. There have been some quick wins but there will be long-term wins as well,” he says.

Linked to all of this is the concept of filing information once across government. This initiative has brought Companies House, the Charity Commission, BEIS and HMRC together to work in sync. “The concept is quite simple,” says Chandler. “Why have accounts information filed in more than one location with more than one government body? If you can simplify that, you have cost savings, customer burden savings, as well as reducing fraud risk.” At the pilot stage alone, there were savings to the tune of £15m in respect of fraud and error. 

There are now five or six cross-governmental proposals for collaborative working being scrutinised. One of them is with the Office for Tax Simplification. This is aimed at reducing the burden on small businesses when they first incorporate. It brings together tax guidance, Companies House guidance and delivers prompts within the system to improve the user journey.

“I think we're quite far advanced at HMRC on things like identity verification and data exchange, so we are able to help other departments learn from the journey we have been on,” says Chandler.

What about companies’ reluctance to share data because they might not be clear about what it could be used for, especially if fraudsters can gain access to it?

“As well as the drive to add value and efficiency, it is absolutely paramount to protect customer data. We have entire departments dedicated to making sure that we follow proper data processes, whether that's GDPR or legal gateways,” he responds. “This is why we need this across government collaboration. There are a huge number of restrictions in place. We need to achieve a balance in these collaboration efforts. We cannot lose the public’s trust.”

The Holy Grail is to achieve better quality data in government, increase digitalisation, enhance compliance and have the power of intervention when needed. Chandler concludes: “This is a long-term project, but it is well advanced. We are looking forward to continuing this exciting joint work as the legislative reforms are introduced”.

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