Do not change the self-assessment tax registration rules, says ATT

22 March, 2022

In its response to an HMRC call for evidence on Income Tax Self-Assessment (ITSA) registration for the self-employed and landlords, the Association of Taxation Technicians (ATT) calls on HMRC to focus on improving their IT systems and processes rather than changing the existing obligations to register for self-assessment.1

Under the current registration process, newly self-employed people and new landlords who are not already in self-assessment are required to notify HMRC that they have commenced trading/letting property within six months of the end of the tax year in which trading/letting started.2 This allows the individual to establish if they have any tax to pay - and therefore an obligation to notify - after the tax year, at the point at which all facts are known.

In the call for evidence, two alternative proposals were put forward. Firstly, reducing the current deadline for registration from six months to two, three or four months from the end of the tax year and secondly, creating a new obligation to notify HMRC during the tax year in which activities commence, triggered by the start of a new self-employed or property income source or when a threshold of £1,000 of gross income received is passed.

Jon Stride, Co-chair of ATT’s Technical Steering Group, said:

“We are not convinced that HMRC’s proposed reforms would achieve significant improvements to taxpayers’ experience of registering for self-assessment.

“However, we have received very significant feedback from our members suggesting that improvements to the operation of HMRC’s IT systems and processes for dealing with self-assessment registration would greatly improve the experience both for taxpayers and their agents.”

The ATT has called for improvements to HMRC’s systems so that the existing registration process is more integrated. Currently, agents are not able to register all types of client for self-assessment online and must resort to (slower) paper-based forms in some cases. Neither is it possible for a taxpayer to register for self-assessment and authorise their agent to act for them at the same time. Other improvements could include a tracking system to allow taxpayers and agents to see the progress of their application and for taxpayers and agents to print or save a final copy of their registration.

Notes for editors

  1. The ATT’s full response is available here and details of the Call for Evidence can be found here.
  2. The notification deadline is the same for all new taxpayers who are not already in self-assessment and is linked to the tax year. It is possible to register in advance of the deadline, within the tax year that trade/letting commences and according to HMRC’s own figures almost 70 per cent of taxpayers already voluntarily choose to register well in advance of the 5 October deadline. 
  3. This is an early-stage consultation by HMRC and forms part of the Government’s 10-year tax administration strategy. There is no final recommendation in the consultation and no date set for any change to the way people register to pay their income tax.