HMRC launch consultation on collecting more data from taxpayers

HMRC have published a consultation document seeking opinions on its proposed options to look at increasing the range of data it can collect from businesses and individual taxpayers, which it will both use internally and share across government. The consultation document (which can be accessed here) states that the aim is to ensure that the data held by HMRC provides the most accurate picture possible on citizens and businesses “to help build a trusted, modern tax administration system and improve government policy making”.

The potential changes set out in the consultation will most likely affect all self-employed taxpayers, all employers, employees about whom additional data may be stored and shared, as well as tax agents and tax or payroll software providers for these groups.

The consultation highlights six specific areas where HMRC consider data could be improved, these being:

• the business sector of the self-employed   
• the occupations of employees and the self-employed
• the location of an employment or a business
• the hours employees work 
• dividends paid to shareholders in owner-managed businesses     
• the start and end dates of self-employment

Details from these particular fields will, according to HMRC, support them in obtaining additional evidence to support sector-specific policy interventions such as tailored help during a future crisis. It should also help direct the government further under its levelling-up agenda and target specific areas, increasing its ability to focus compliance reviews towards higher-risk sectors.

Undoubtably, the additional pertinent information being obtained from taxpayers, be that individuals or businesses, will assist HMRC in identifying potential tax compliance/avoidance areas.

If any of these options are taken forward by HMRC, it is expected that the additional data will be classified as mandatory and therefore would require HMRC to be given additional information and enforcement powers. Furthermore, any returns not containing the required information would be classed as incomplete and likely open to the penalty regime for incomplete or late returns.

In addition, it would be expected that the implementation of any of these options will raise administrative costs and burdens on both businesses and individuals who are impacted by and need to comply with the new rules.

The consultation is open until 12 October 2022, following which the government will publish a summary of the responses and confirm the changes they wish to make, with any proposed changes to the legislation being included within Finance Bill 2023-24 at the earliest.

These potential changes indicate that HMRC remain focused on enhancing their ability to strategically target businesses and individuals where it considers there is a potential for tax loss; the proposed data gathering will only improve their knowledge.

If you would like to raise anything we’ve discussed in this article, please contact us at info@guildhubservice.co.uk and talk to our expert team. We’re here to help.