HMRC is actively encouraging taxpayers to use online services or the HMRC app to manage their tax affairs. The single customer account (SCA) will underpin these services. The concept of a single digital tax account was first publicly mentioned by HMRC in the Tax Administration Strategy in July 2020. The SCA programme was established following the Spring Budget 2021. Funding of £95m towards investment in HMRC’s digital infrastructure (£68m for the SCA and unique customer record (UCR)) was confirmed in a tax policies and consultations command paper shortly afterwards. Additional funding of £135m was provided in the Budget and Spending Review 2021. 

The aim is to deliver integrated, personalised accounts allowing people to view and engage digitally with all their tax affairs in one place.

HMRC may move away from referring to the SCA in public communications, though it will continue to be used as the programme name. Taxpayers will be signposted to the HMRC app and online digital services, so you won’t generally see the SCA mentioned in taxpayer communications.

Expect evolution rather than revolution. There will be no big reveal or launch of the new account. HMRC plans to continually improve the design of the digital services it provides. Services that are currently online and in the HMRC app will be gradually integrated and improved and new services will be added. The plans go well beyond a merger of the current personal and business tax accounts.

HMRC will focus development on the areas that add the most value (ie, where taxpayers most need support or need to change or check information most regularly). This will be driven by user insight and feedback on the biggest pain points as well as HMRC’s need to achieve channel shift from post and phone contact to digital.

The initial stages will deliver improvements for individuals. Delivery of services for businesses and agents is being considered but is a bit further down the track. HMRC is currently looking at how digital services delivered through the SCA can help with managing agent permissions for access to client data and services.

Just as important as the front end is the behind-the-scenes work to connect data held in a myriad of HMRC legacy systems and databases through the UCR programme.

What has been delivered

The SCA programme has already delivered:

• A new digital child benefit claim service. Claimants can apply, update their bank details, confirm their child is staying in education, provide proof of entitlement and view their last five payments online or via the HMRC app.
• A new feature that allows users to store their national insurance number (NINO) in their smartphone’s digital wallet.
• Functionality to view employment history online.
• Improvements to how users change their address online and via the HMRC app. 

What is next

The SCA programme has told ICAEW that during the rest of 2023 and early 2024 it is focusing on: 

• bringing more digital services together in one place, with improved online design and navigation;
• working with Government Digital Service (GDS) – the One Login for Government programme – to make it easier for people to sign in and subscribe to digital services securely;
• using digital communications to support taxpayers through digital journeys so they continue through to completion and receive the required online support;
• further improvements to how people manage child benefit; and
• simplifying the actions needed when starting and leaving jobs, helping taxpayers understand when and why their tax code may change.

After income tax services for individuals (personal tax account users), HMRC will move on to business services, starting with sole traders with business taxes such as VAT, construction industry scheme, employer’s PAYE and national insurance contributions.

Opportunities and challenges

The SCA programme has great potential – it is an exciting game changer. HMRC’s digital services have been developed in a piecemeal fashion. Bringing this all together into a coherent whole means addressing gaps in services, making them easy to find and use, and simplifying sign-in. Many users fail at the first step of setting up Government Gateway credentials. The separate GDS One Login for Government programme is seeking to address this.

The Office of Tax Simplification (OTS) evaluated the SCA plans and published a report in March 2022, saying there is potential to greatly improve the tax experience of taxpayers, while also creating significant efficiency and cost savings for HMRC. The OTS considered that it would be very helpful for HMRC to provide an indicative roadmap for individuals. So far, we have only the limited information provided above.

The OTS highlighted the potential for additional functionalities such as the capacity to facilitate the use of, and access to, third party data, as a hub for claims and elections and to deal with capital gains tax (CGT). It suggested that in the longer term, functionality should also include state pension and could potentially be extended to include some social security benefits. The OTS highlighted the potential as an effective communications tool, providing tailored nudges and prompts and reminders to assist and support taxpayers.

As with any large programme, there will undoubtedly be challenges – SCA is bigger than most. Some benefits will be realised reasonably quickly but it may be a decade or more before it becomes mature. HMRC will need to maintain commitment to the programme, and secure the necessary funding from government, over a long period.

Among the challenges is the need to overhaul the PAYE system. This has been raised by ICAEW in many representations over the years and it was mentioned in the OTS report.

The tax system does not remain static so the SCA will need to keep pace with other developments. HMRC’s vision is that new and existing HMRC services will be made available through the account as they are introduced, upgraded, and digitalised. Development will need to work hand in hand with other changes that HMRC is working on, such as taxpayer registration for self assessment, and possible changes to payment policy (timely payment). It is no accident that the first new service to be developed by the SCA programme is child benefit for which no digital service was previously available. It is easiest to start afresh in a discrete area.

One of the biggest challenges is the issue of taxpayer identifiers. The current design is based on national insurance numbers (NINOs). As we are only too aware, not all individual taxpayers have, or are entitled to, a NINO. This is one of the unsolved issues for making tax digital for income tax self assessment and will also pose a problem for the SCA programme. 

The UCR programme will be working to match up a taxpayer’s different references – including NINO, employer references, income tax self assessment unique taxpayer reference (SA UTR), corporation tax reference and VAT registration number – to create a single record for each legal entity. The move towards a single customer record was a factor when designing the VAT registration service and the requirement to provide either a SA UTR or corporation tax reference when applying for a VAT number. This has caused some considerable frustration where the business is waiting for a reference to be issued or where there is no requirement to register for income tax self assessment or corporation tax.

The job of the SCA and UCR programmes is very much easier when taxpayer records are held on HMRC’s new enterprise tax management platform (ETMP). So far, this task is complete only for VAT and some smaller taxes. We are many years away from income tax and corporation tax records being re-platformed onto the new database. It is to be hoped that it will be possible to find a workaround so information in legacy systems can be linked up and available to be used by the SCA programme. Linking income tax records in the self assessment system (CESA) and the national insurance and PAYE service (NPS) presents a particular challenge. 

Last, but very much not least, it is essential that the SCA programme is closely aligned with HMRC’s agent strategy, with appropriate agent access to the services and information that clients can access through their SCA being built in from the beginning. For far too long, digital services for agents have lagged behind those available to taxpayers to the extent that it undermines agent confidence in HMRC as an organisation. The gap in digital services available to agents and taxpayers must not be allowed to grow.

A balancing act

To conclude, the SCA and UCR programmes have the potential to provide step change benefits to taxpayers, agents, and HMRC. They also have the makings of a longer-term solution to HMRC’s customer service problems. Careful communication will be needed to balance the promise of improvements with realism about the pace at which they can be delivered. To date, HMRC appears to be realistic about the challenges and must remain so. Engagement with a wide group of stakeholders at an early stage before irreversible decisions are made is essential; we want to and can help. Research and testing of products with end users is critical but experience (for example, with the CGT on UK property reporting service) has shown that it is not sufficient. User testing cannot consider the context of how a service fits together with other HMRC systems or whether the system gives the correct outcome in all possible scenarios.

Caroline Miskin, Senior Technical Manager Digital Taxation, ICAEW