As part of our commitment, we recently set HM Revenue and Customs a stretching target to reduce costs to business by £250 million by March 2015.
The changes we are making to tax rules and administration will make the tax system easier and more comprehendible for employers and employees alike. For example, reporting PAYE in real time will benefit most employers, because they will no longer need to complete an end of year return (P35) – and on top of this it will support new online PAYE services for employees. There are exciting possibilities, not only for HMRC’s capabilities, but for what can be achieved when we work in partnership with others, whether that’s software developers, accountants, banks or others.
One excellent initiative that HMRC is committed to deliver as part of its departmental digital strategy is a personalised Tax for My Business “homepage”, giving businesses access to an overview of their HMRC accounts, links to all their online transactions (registering, filing and paying), a facility for accessing help and asking HMRC questions, and access to tailored education and support.
But it’s not just Government that can make a difference here – and it’s not just big projects. There are already online tax calculators and record-keeping apps provided by third parties, not to mention many sources of help and support for businesses. We want to explore the opportunities to open up data for use by third parties to develop new tools and apps and pre-populate filing software.
Another example of the advances we are making is the change to income tax self-assessment for small unincorporated businesses. We’re simplifying the requirements for accounting and expenses calculations, saving businesses time and meaning that they only pay tax on money they have received, not what they are waiting for.
This change will come in to effect from April 2013 and is a gateway for HMRC to explore opportunities with software companies and banks. Apps will help businesses understand whether the new accounting rules are right for them, alongside, for example, advice on business records. And, if businesses use a business bank account to manage their receipts and payments, the information required to carry out their tax calculations will all be to hand, with the potential – for instance – to link to tax calculation or filing software.
The idea that banks or other third parties can provide businesses with a trusted digital identity, which can be used across government and the public sector through a single registration and verification service, has real potential.
Setting up in business would become simpler and faster, and a single ‘account’ could link businesses to sources of support, provide a single identity credential so that individuals do not have to remember multiple user names and passwords, help calculate taxes, and pre-populate elements of the tax return. In addition to saving businesses work when completing tax returns, these accounts could even set aside sums which are estimated to be owed to HMRC in a sub-account, ensuring businesses know where they stand without the prospect of an unexpected tax bill.
Some of these opportunities exist today, and with the changes taking place to make the tax system simpler, as well as the ever-advancing world of digital technology, more will become possible in the near future.
As a Government, we’re doing everything we can to facilitate this kind of market-led change and to do our bit, whether it’s providing APIs for tax calculations (as HMRC already do for software developers), or simply communicating the changes and opportunities we are making to those that will be affected by them and to third parties with the potential to build on them.