Consultation: How HMRC can improve the data it collects from customers

21 July 2022

Her Majesty’s Revenue and Customs (HMRC) has published a consultation, which makes several suggestions regarding how the range of data it collects can be improved.

The consultation’s aim is to explore how additional data could be collected as part of the tax system, while ensuring any additional burden is as minimal as possible. Of biggest interest to payroll professionals will be the proposals regarding changes to real time information (RTI).

Occupational data could be used to understand the skills the government needs to focus on to best help employers and employees. In terms of collecting this data, the consultation suggests requesting more information on the occupations of employees, through an additional field added to RTI. This would be implemented in two phases:

  • phase 1 would involve the initial collection of this data from those who are employed to create a ‘baseline’
  • phase 2 would involve continuous updates to records to reflect when employees join or leave organisations, or when they change occupation. This could be sent to HMRC only when circumstances change, or included with every return, whichever is easier.

HMRC would ideally like this to be a compulsory RTI field.

HMRC is also exploring the possibility of requesting that employers detail the office location or normal work base of their employees. This is with the aim of highlighting to HMRC where there are locations of real economic activity and to show the split of activity between a business’s locations. RTI already asks that employers provide the home addresses of each employee, and the office location address would follow the same format: six fields, with two compulsory address lines, two ‘if applicable’ address lines, a UK postcode field and a foreign country marker. There could be a new field for use where a worker doesn’t have a standard work address.

There could also be changes to the way employee hours worked are recorded. Currently, there’s a requirement to select from a range of bands (A to D) of hours through RTI. There’s also the option of selecting a band E (‘other’) for workers on zero hours contracts or anyone without regular working patterns. HMRC has suggested the following options, of which one or both could be taken forward:

  • replacing current categories, A to D, with a numerical input of hours worked
  • splitting out band E (‘other’) to detail the reason for the irregularity.

This could help with ensuring employers are paying at the national living wage and national minimum wage rates.

CIPP comment

The CIPP’s policy team is aware that the proposals put forward in this consultation could have significant impacts on the payroll industry. The team will be responding to the consultation, so keep your eyes peeled for updates on how you can get involved in the very near future. If you have any feedback in the meantime, please get in touch with the team, at [email protected].