HMRC moves to modernise customer tax accounts

The motivation

HMRC is keen to utilise more data sources and developments in technology to remove the need for taxpayers to complete a self-assessment tax return on an annual basis, and of course reduce the resource involved in processing these returns. The Chancellor has awarded HMRC £68m to develop a new “single customer account” (SCA). This will replace the personal tax account and business tax account and have much improved functionality to allow taxpayers to interact with HMRC about their tax affairs and income.

Building blocks

The SCA will display data based on the single customer record which HMRC will maintain across different taxes and data sources associated with a taxpayer. Third-party data, from banks and financial institutions, will feed the single customer record and in turn allow this to be viewed by the taxpayer via their SCA.

What data?

At the moment it’s envisaged that HMRC would, for example, receive information on an individual’s savings and investment income that would negate the need for the taxpayer to initiate claims for higher and additional rate tax relief on pension contributions, or tax relief on gift-aided charity donations, allowing HMRC to make automatic changes to tax codes to affect the claim. The vision is also that the data would be used to pre-populate a tax return if one was still needed.

Verification and identity

Ensuring that there is a mechanism to allow an individual or their agent to verify/correct the data that has been reported about their savings and investment income must be part of the system design. Equally, a correct and quick match with an individual taxpayer can only be achieved with a unique identifier, however not everybody has, or requires, an NI number, so work is underway to find other ways of linking data sources securely.

Wish list

Employers have said that they would like to see information that they already supply to HMRC/employees being visible in the SCA. This would include: CIS data, state pension data and information from P45s/P60s and P11Ds . Conversely, some information that is only sent to employers and not employees should be included - P800 assessments of under or overpaid PAYE and gains from the sale of shares.

What next? 

Work is underway to agree a roadmap with third-party providers, employers and industry bodies that would set out timescales, data standards and the use of the required data by HMRC.