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Published on 7 June 2023

Simplifying and modernising HMRC’s Income Tax services through the tax administration framework

LITRG has responded to HMRC’s discussion document on simplifying and modernising HMRC’s Income Tax services through the tax administration framework.

image of the words 'Income Tax' surrounded by other key words such as: Accounting, refund, pay, currency etc.

This discussion document concerns HMRC’s digitisation agenda, specifically regarding Pay As You Earn (PAYE) and Income Tax Self Assessment (ITSA).

In our submission, we stress that – although we are broadly supportive of HMRC’s ambition to improve the scope and quality of their digital offering to taxpayers to achieve a digital channel shift – access to non-digital options should not be made more difficult to encourage that shift. Doing so would make the experience for genuinely digitally excluded taxpayers more difficult and would not be in line with HMRC’s Charter, their Digital Inclusion Strategy, or their principles of support for taxpayers who need extra help.

Instead, we ask that HMRC’s priorities include the following:

  • improving existing services to allow (or encourage) everyone who wants to transact digitally to do so;
  • addressing the ongoing difficulties for certain taxpayers in passing Government Gateway verification checks; and
  • focussing on improved guidance within forms and tools.

Regarding HMRC’s proposals to move various forms to ‘digital by default’, we observe that some forms may be more suitable for the change than others. In particular, we feel that notices to file a tax return should continue to be issued by post unless the taxpayer has opted in to receive that type of digital communication, and only after their legal significance has been clearly explained. Tax returns should also be more readily available on paper.

For PAYE, our response includes specific suggestions for improving its operation with the digital agenda in mind, including that DWP should apply PAYE to taxable benefits, tax codes should be easier to understand, and there should be more flexibility to get them changed when they are unsuitable.

For ITSA, we stress the importance of the alignment of the criteria with the law. We do not support mandatory digital registration, or mandatory online filing following such a registration.

Our consultation response can be seen here.

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