Government data grasp concerns CIOT
Increasing the data HMRC collects from businesses and employers risks placing significant extra burdens on these taxpayers, putting more stress on the tax authority’s already strained resources and means HMRC demand data from taxpayers that is not relevant to their core role to collect and manage revenue or tax credits, cautions the Chartered Institute of Taxation (CIOT).1
In a recent consultation, HMRC explored potential options for improving the range of data it collects, uses and shares across government. Noting that the COVID pandemic brought into sharp relief how little the Government knows about its citizens and businesses, the consultation claims that improving the administrative data collected by HMRC and other departments can provide the best source available for key economic statistics and lead to better policy and operational decision-making across government.
John Barnett, Chair of CIOT’s Technical Policy and Oversight Committee, said:
“We are concerned that gathering this additional data will place significant extra administrative burdens on employers and businesses, for little or no direct benefit to them.
“We recognise that the Government wishes better to target investment and support, helping grow the economy and deliver improved policy outcomes. But such decisions need to be evidence based. While the tax system may be as sensible a way as any other of collecting this data, some of the data – for example employee occupation and location data – may be difficult to collate and provide to HMRC in a cost-efficient way.”
John Barnett said:
“CIOT members continue to contact us about their frustration at HMRC’s poor service levels and response times, with many saying it is hard to get any sort of response from the government department at all.2
“We can see that there are potential tax benefits in collecting some of the data, for example in helping to target HMRC’s compliance activity better. But we question whether HMRC have the resources to handle the collection, analysis and processing of this amount of additional data. Is it a good use of HMRC’s limited resources to handle this data, much of which is intended for use by other government departments?
“Unless additional resources are made available specifically to cope with the processing of this additional data, we urge HMRC to prioritise improving the delivery of its existing services and compliance activity before taking on further responsibilities. Even if additional resources are made available to HMRC, we strongly suggest it is better used to bring service standards back to an acceptable level.”
Commenting on the need to expand HMRC’s statutory duties, John Barnett continued:
“If this does go ahead, it will be necessary for Parliament to grant new powers to HMRC to enable the additional data to be collected. The collection of this sort of data – for example, business sector, occupation and location – on a mandatory basis is currently outside of the functions of the Commissioners for HMRC because it is not relevant to the collection and management of revenue or tax credits. It also appears that other changes will be needed because existing legislation appears to preclude the sorts of cross-government sharing of data implied by the consultation document.3
“We also have concerns about the penalties taxpayers may face if this is made compulsory. While HMRC say they will take a reasonable and proportionate approach to penalties, we think that there should be a separate penalty regime – which is not tax related – if taxpayers omit or provide incorrect data unrelated to their tax liability. If you fail to provide a business sector code, for example, that should not make the whole tax return incomplete.4 HMRC should also not be able to extend their usual time-limits for enquiring into tax returns simply because, for instance, one small piece of non-tax data has not been provided.”
