Modernisation of the tax system must not leave anyone behind

In July 2020, HMRC set out their ten-year plan for building a trusted, modern tax administration system.² This strategy set out:

• the next steps for the making tax digital programme
• the government’s intention to explore the possibility of paying tax on a more regular basis
• broad plans for reforming the tax administration framework

Today’s calls for evidence aim to move this work forward.

Victoria Todd, Head of LITRG, said:

“We are generally supportive of the planned modernisation of the tax system, but HMRC must ensure that it does not leave any taxpayer behind, including those who struggle to operate digitally.

“The tax administration framework is long overdue a review and update. HMRC’s plans are bold and ambitious. Time must be taken to get things right. It is therefore welcome that HMRC do not appear to be rushing through major changes but have today launched open calls for evidence.

“In December 2020, LITRG published a paper³ setting out seven principles for the tax system, under which we made 47 practical recommendations. We will be responding to the calls for evidence with these principles firmly in mind to ensure that the needs of low-income, unrepresented taxpayers are fully met.

“Two of the principles are particularly relevant today. The first is that the tax system must be accessible and responsive. Not everyone can deal with their affairs digitally and some will require more hand-holding than others in adapting to digital changes. HMRC must ensure that traditional channels remain accessible in practice and not just in theory.

“The second is that the tax system must be joined up. Major changes to the tax system cannot, and should not, be considered in isolation. HMRC must work with other government departments and ensure they fully understand potential interactions with other systems, such as welfare benefits. For example, if HMRC were to move to a system in which tax payments were made more regularly than they are under Self Assessment, this could have impacts for universal credit claimants.

“We therefore welcome HMRC’s willingness to engage with stakeholders to help develop their plans and indeed HMRC’s specific mention of vulnerable and low-income people in today’s publications is reassuring.”

Notes for editors

1. Call for evidence: the tax administration framework: supporting a 21st century tax system (see https://www.gov.uk/government/consultations/call-for-evidence-the-tax-administration-framework-supporting-a-21st-century-tax-system) and Call for evidence: timely payment (see https://www.gov.uk/government/consultations/call-for-evidence-timely-payment)
    
2. https://www.gov.uk/government/publications/tax-administration-strategy/building-a-trusted-modern-tax-administration-system
    
3. The paper, ‘A better deal for the low-income taxpayer’, (https://www.litrg.org.uk/latest-news/reports/201204-better-deal-low-income-taxpayer) sets out that the tax system should be: clear and up to date; simple; equitable; just; accessible and responsive; joined up; and inclusive.

Low Incomes Tax Reform Group (LITRG)

The LITRG is an initiative of the Chartered Institute of Taxation (CIOT) to give a voice to the unrepresented. Since 1998 LITRG has been working to improve the policy and processes of the tax, tax credits and associated welfare systems for the benefit of those on low incomes.

The CIOT is the leading professional body in the United Kingdom concerned solely with taxation. The CIOT is an educational charity, promoting education and study of the administration and practice of taxation. One of our key aims is to work for a better, more efficient, tax system for all affected by it – taxpayers, their advisers and the authorities. The CIOT’s work covers all aspects of taxation, including direct and indirect taxes and duties. The CIOT’s 19,000 members have the practising title of ‘Chartered Tax Adviser’ and the designatory letters ‘CTA’, to represent the leading tax qualification.