Improving the data HMRC collects

LITRG recognises that there can be benefits from HMRC gathering additional data relevant to taxpayers’ tax liabilities. However, we raise a few concerns in relation to the proposals in the consultation document.

There needs to be more use of data to improve the taxpayer experience, rather than focusing purely on minimising the tax gap. Use of data that results in HMRC assisting taxpayers to benefit from the reliefs, allowance and deductions they are entitled to will help build trust in the tax system, which will improve compliance.

HMRC do not currently make best use of the data they already gather. While we accept there are sound arguments in some cases for gathering more data, in general, we think the starting point should be to focus on making best use of data they already collect.

In relation to most of the options put forward in the consultation document, the foremost argument for collecting the data is to assist the government in other areas of policy, rather than tax. We have requested clarification as to whether HMRC are the appropriate body to collect and use the various types of data included in the consultation.

Finally, the HMRC propose that it will be mandatory to provide the data and that penalties will apply where it is not provided. We raise a few questions, including whether HMRC have the appropriate resources or expertise to exercise judgement as to whether a piece of data is accurate or complete.

Our consultation response can be seen here.