HMRC to delay MTD for individuals

HMRC has acknowledged that its digital transformation programme has not ‘all been smooth sailing’ and says the need to refocus priorities to meet the demands of Brexit mean it will delay plans to introduce more digital services for individuals

In an email to stakeholders, following on from CEO Jon Thompson’s appearance at a public accounts committee session, HMRC says it was ‘overly ambitious’ about the number of individuals who would stop contacting the department by phone and post after it introduced digital channels. Demand is falling, but not by the amount assumed in 2015.

At the same time, HMRC has been forced to prioritise EU exit work, including a major upgrade to the customs declaration system.

Brian Palmer, tax policy adviser, AAT (Association of Accounting Technicians), said: ‘The department is now being required to deliver essential programmes to support access to European markets and boost worldwide free trade. Many of these projects will need to be underpinned by sophisticated digital systems.

‘At the end of 2017, HMRC had 15 major programmes and more than 260 projects running. It is hardly surprising in this context that Jon Thompson, HMRC’s CEO, felt the need “to take a step back and look carefully at what we could, and should, deliver in light of those challenges.”.’

According to the email, which was sent to AAT among others, HMRC has decided to delay plans to introduce further digital services for individuals, to release project capability to EU exit work. This means halting progress on simple assessment and real time tax code changes.

It will pause work to digitise services that impact fewer numbers of individuals, such as those paying inheritance tax, or applying for tax advantaged venture capital schemes and PAYE settlement agreements, but will strive to encourage further uptake of personal tax accounts.

HRMC says as no new tax credits claims will be made after January 2019, it will not move ahead with an online service for new tax credits claims, but will focus instead on improving the existing tax free childcare system. Changes to the child benefit system will be limited to the underlying IT infrastructure.

HMRC launched the voluntary Making Tax Digital for business service for income tax on 15 March and says it is on track to introduce the mandatory service for VAT for those with a taxable turnover above the VAT threshold from April 2019, with a live pilot just starting.

The email states: ‘The prioritisation work means the convergence of business taxes from our current range of IT systems onto a single system will now happen at a slower pace. This will slow the creation of the single account for all business customers. This remains our ultimate aim and it does not impact the delivery of Making Tax Digital.’

Palmer said: ‘It seems that the demise of the self-assessment tax return has been greatly exaggerated, at least for the time being.’

Accountancy Daily