David Gauke on Making Tax Digital

02 March 2016

The Armstrong Watson event: 'Essentials of pensions, tax and payroll in 2016' received a speech by the Financial Secretary to the Treasury David Gauke on the Government’s Making Tax Digital plans.

Mr Gauke said:

These reforms will improve the quality of record keeping, reducing the likelihood of mistakes and contributing £920 million to the Exchequer in additional revenue by 2020, then £600 million a year thereafter. This is good news for businesses – and good news for the Exchequer too.

But with big changes come challenges and concerns. So I would like to take this opportunity to address some of these concerns; because I do not underestimate the scale of these changes, and it is important that we get this change right.

First of all, this transformation does not – repeat, not – mean four tax returns a year.

What it means is that by 2020, most businesses will be keeping track of their tax affairs digitally, updating HMRC at least quarterly via their digital tax account.

Importantly, these quarterly updates will not involve the complexity of a full tax return, where the business, or their agent, has to gather together and manually input data onto an electronic or paper form, and then perform various calculations.

Instead, updates will be generated from digital records and in most cases, little or no further entry of information will be needed. It will be much quicker, easier and far less burdensome than the current process. The agony of the annual tax return will be a thing of the past.”

The Financial Secretary went on to highlight some of HMRC’s performance figures for this year:

  • "This year saw a reduction of almost a quarter in the number of people submitting a paper tax return – that’s over 340,000 fewer people doing things the old way.
  • Meanwhile, the percentage of people using online filing has increased once more – from 85% to 89%.
  • More than 825,000 customers accessed their Personal Tax Account as they completed their tax returns.
  • Over a quarter of a million customers used HMRC’s virtual assistant in the last 3 weeks of January.
  • Over that period, HMRC staff assisted in more than 114,000 webchats.
  • And because of these digital advances, the number of phone calls to HMRC in January from people seeking assistance to complete a Self-Assessment return has fallen by over 50% in the last two years.”

Mr Gauke rounded off his speech by saying that there will be a wide-ranging consultation exercise starting in the spring, which he urged all payroll professionals to get involved in.

“We are already talking to a wide range of business, agents, software developers and professional bodies. We are introducing these reforms gradually – not phasing them in fully until 2020, because we know how important it will be to give taxpayers time to adapt. We are using volunteers to stress-test new services, so we can be confident these new services work before we roll them out.”

The CIPP Policy Team will of course be fully involved in all consultation and will involve members accordingly.

You can read David Gauke’s speech in full on GOV.UK.