This week HMRC emailed its stakeholders to inform them how Brexit has affected the department’s priorities.
The Revenue reaffirmed its long-term commitment to making the UK the “the world’s most digitally advanced tax authority” but admitted that some initiatives will be scaled back to “release project capability to EU Exit work.”
This comes months after the Public Accounts Committee expressed concern over the tax authority’s “risky” decision to pursue 15 major transformation programmes and over 260 projects concurrently rather than sequentially.
Digital projects being scaled back
HMRC confirmed that introducing further digital services for individuals will be delayed, including the roll out of the Simple Assessment for income tax, real time changes to PAYE tax codes and Making Tax Digital (MTD) for Individuals.
Digital services impacting small numbers of customers have also been halted, such as paying Inheritance Tax, applying for Tax Advantaged Venture Capital Schemes and PAYE settlement agreements.
Furthermore, HMRC will not move ahead with an online service for new tax credit claims as no new tax credits claims will be made after January 2019.
Yvette Nunn, co-chair of ATT’s Technical Steering Group welcomed the delays to allow HMRC to iron out existing issues.
She said: “There have been reports of inaccuracies in the information which HMRC have used in Simple Assessments to calculate tax bills. As a result, taxpayers are required to check these carefully once received, especially as they only have 60 days to correct any errors.”
Referring to real time changes to PAYE tax codes, she said: “dynamic coding has caused some employees who have been paid a bonus early in the tax year, or who have uneven earnings, to receive an incorrect tax code which can lead to a tax overpayment.”
Ongoing digital progress
Pilots for MTD for Business are ongoing and a voluntary service for income tax launched on 15 March. Mandatory reporting for VAT for those with a taxable turnover above the VAT threshold is on track to begin April 2019.
The tax authority reaffirmed that it will not mandate any further MTD for Business changes before 2020 at the earliest.
The taxman noted several points of progress in its digital transformation agenda, such as 15m people now having Personal Tax Accounts, 3m businesses using Business Tax Accounts and the introduction of several online services including an HMRC app and virtual assistant.
However, it also conceded that it was “overly ambitious” about the number of customers who would stop contacting it by phone and post after the introduction of digital services.
HMRC has said that leaving the EU means its focus will be on delivering programmes to support access to European markets and boosting international free trade, to be delivered by sophisticated digital systems. Projects relating to changes to tax credits and VAT will also be a focus.
The new Customs Declaration Service (CDS), declared to be “flexible enough to support any new UK customs regime”, will be delivered by January 2019, and the existing CHIEF customs system will be upgraded.
Currently 99% of the 55m annual customs declarations are made online through the CHIEF system, and 92% of these are processed within five seconds, according to HMRC.
Other HMRC programmes will be launched to support the free flow of goods and revenue collection at the border, including “ensuring the smooth flow of freight and passengers from day one, and introducing processes and systems that will allow frictionless movement of goods between the Republic of Ireland and Northern Ireland.”
HMRC said that the final details of this work will be dependent on the confirmation of the Department’s 2018-19 budget settlement.