HMRC poised to move personal tax totally online?


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Money, News

HMRC, and the UK Government as a whole, have been making huge strides with their digital services since the publication of the “digital by default” strategy document over a year ago.

Over the last few years HMRC have moved VAT returns completely online, upped online personal tax filings from 23% in 2006 to 81% last year, and modernised payroll filings through the introduction of RTI. They’re not done yet though, and recently launched a consultation on making Self Assessments a totally paperless process.

Although Self Assessments can be filed online, the registration process is a more analogue affair. Registering to complete a personal tax return online involves a fairly baffling back-and-forth with the taxman to receive a Unique Taxpayer Reference Number, and then an activation PIN for HMRC Online Services. This consultation is looking into how HMRC could make the entire process completely electronic, making the Self Assessment process paperless end-to-end.

Of course, this being Government, it’s not quite as simple as you might imagine. HMRC cannot simply decide to make the process paperless and start sending emails – they must first amend The Income and Corporation Taxes (Electronic Communications) Regulations 2003 using the powers set out in Section 132 Finance Act 1999. The purpose of the current consultation is to “[seek] views on the necessary legislative changes required to enable the delivery of its Paperless Self Assessment exemplar.”

A necessary change

Following the consultation, HMRC is planning to pilot their paperless Self Assessments from April 2014. The proposals include moving all “Statutory notices” (basically meaning everything you currently receive in the post) to email or SMS – however not quite in the way you might think.

Under the proposed changes, you wouldn’t actually receive the statutory notices in your inbox – instead you would receive notice of a new message, and would then have to log into a secure HMRC system to actually read the message.

This may seem a little clunky, but given the volume of tax refund email phishing scams, HMRC most likely deemed it a necessary security measure. The electronic communications would be an opt-in process; so it seems Self Assessments will never be – ironically – digital by default. Nevertheless, a promising step in the right direction from the taxman, and one you can read about in detail here (PDF).

Photo by Suzi Duke