Draft legislation: Better use of new and improved third-party data

Our brief submission emphasised that while we think that smarter use of third-party data has the potential to improve the taxpayer experience with HMRC, we have some concerns about the draft legislation.

The draft legislation provides for HM Treasury to make regulations requiring data holders to make reasonable efforts to obtain identifying information, such as National Insurance numbers. Although most individuals aged 16 and over who are in work are expected to have a National Insurance number, there are some individuals, who, while eligible, do not have one.

We understand that, as a result of this legislation, such individuals will be expected to apply for a National Insurance number and to provide this to any financial institution or card acquiring service provider that they hold an account with.

There will also be some individuals who are not eligible for a National Insurance number. Any regulations laid by HM Treasury must provide clarity around how financial institutions should deal with such situations.

We suggest a number of safeguards. These include clear guidance for individuals, but also clarity as to the position where an individual is not eligible to apply for a National Insurance number. It is essential that this legislation does not result in financial institutions refusing to open accounts for individuals who are not eligible to apply for a National Insurance number.

Finally, we think the requirement placed on data holders to provide data that they supply to HMRC also to the person to which that data relates should be refined – data holders should be obliged to share the information with taxpayers in a format that they can easily understand and that is consistent across third parties.