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Concerns over HMRC ideas to test new policies on small groups

28 April, 2023

Proposals to allow HMRC to test new policies or processes with small groups of taxpayers before rolling out changes to the wider public will not address the real problems around the implementation of new digital services, the Association of Taxation Technicians (ATT) has warned.

The Government has today published a discussion document1 on the possibility of suspending the usual tax rules for selected group of taxpayers for a limited time, which would allow it to explore the effects of changes in policies or processes before rolling them out to the wider taxpayer population. 

The ATT has cautioned that, in recent years, taxpayers have experienced a number of issues with HMRCs online services2 needed to manage their tax affairs, following the introduction of new requirements or new processes. 

Senga Prior, Chair of the ATT Technical Steering Group, said:

“Rather than seeking to exempt taxpayers from existing rules to test new systems we think HMRC should turn this idea on its head and look to provide more exclusions and protections for those not able to use new systems or processes after they have launched. A number of HMRC’s recent online services were not open from launch to all who needed to use them, causing those who were excluded a great deal of stress and anxiety as they sought to comply with their tax compliance obligations.

“We are also concerned about the additional time and costs for taxpayers and their agents which will arise from being asked to partake in any pilot. There is always a cost to taxpayers in learning how to manage a new process or obligation. HMRC previously underestimated the transition and familiarisation processes for the introduction of MTD for VAT, so asking or obliging taxpayers to take part in pilots which are unlikely to result in any personal benefit to them will not prove popular.”

Notes for editors:

  1. The consultation The Tax Administration Framework Review – Creating innovative change through new legislative pilots has been published today (27 April) as part of the Government’s annual Tax Administration Day.

  2. In August 2022, HMRC launched a redesigned VAT registration service which had a number of ‘teething problems’ for taxpayers and their agents. Agents initially struggled to get access to the system and, once in, the system did not make provision for all the circumstances in which VAT registration might be required which meant the system did not initially work for all those who needed to use it.

    Prior to that, the Trust Registration Service was only opened to the trustees of non-taxpaying trusts almost a year after the obligations were imposed on them to register. Despite the significant delay, HMRC still required trusts wound up between 6 October 2020 (when the rules took effect) and 1 September 2021 (when it first became possible for them to register) to immediately register and then deregister themselves, despite the trustees having concluded all their other responsibilities.

    When the UK Property Reporting Service first launched in 2020 there was no guidance for users, nor was it possible to amend returns.