The Office of Tax Simplification has called for the government to consider auto-enrolling all taxpayers into HM Revenue & Customs’ personal tax account service, after concerns that developing technology will cause individuals to lose sight of their obligations. The OTS has published a discussion paper looking at the risks tax simplification through technology poses.
The main thrust of the paper is that, although technology can ease the process of filing tax via HMRC’s Making Tax Digital programme, it may also create a future risk for taxpayers, as easier completion will not remove the need to understand and comply with obligations.
Auto-enrolment into the personal tax account service from age 16 could empower individuals to understand their tax affairs more, the OTS suggests. Indeed, technology has transformed much in our day-to-day lives, in some areas almost beyond recognition. But while many tax-related activities have benefited from a digital approach, we are still in the early stages of the transformation.
As such, this paper explores some of the more difficult questions that new technology presents. Here are a few key areas the OTS wants the government to consider:
- HMRC expanding the current personal tax account to deliver better-targeted guidance, alongside looking at automatically enrolling all taxpayers into this service;
- How to mitigate the risk of taxpayers losing sight of their obligations through technology;
- Continuing to monitor private sector technological innovation with the potential to improve taxpayers’ experience of managing their tax affairs;
- The potential for new technology to engage with the public more efficiently and effectively, while saving resources;
- Monitoring the impact of the General Data Protection Regulation on taxpayer choices for security, privacy and convenience;
- Active monitoring of the impact of moves towards a cashless society and the risks of digital exclusion.
The OTS says it will continue to look into the role of technology in tax simplification and gather further evidence of public perceptions through an online survey. In the meantime, advisers remain divided on the potential for positive change.
Phil Wickenden is an independent consultant