HMRC’s external research plans for the next year give us a glimpse into what they consider to be a priority now and in the future.
First, there is a heavy focus on research to enhance customer service, which is always welcome. It has to be said that, whilst improving websites would be good, based on current HMRC statistics the problems the customers are likely to be more concerned about are long call waiting times and delays in dealing with post.
There will be research to see how many people now have cryptocurrencies and, more intriguingly, how many are aware they are liable to tax. There is also an emphasis on people making money via intermediaries, for instance letting rooms in their homes. Anyone engaged in any similar activities would be well advised to make sure their tax position is regularised before they are targeted.
There is also specific research into Chinese online market place sellers. There had been a general focus on online sellers for some time, but this specific research presumably indicates a belief that a material number of UK sellers are now using these websites and may be unaware of their tax obligations.
There are the research projects into problems which have existed for some time, where it would be hoped HMRC should already have significant information.
Perhaps most striking is a look at the level of knowledge of the higher income child benefit charge, an obscure and complex clawback of child benefit which draws many taxpayers unknowingly into the self-assessment regime. The charge has been in place since 2013 but cases of failure to return continue to go to tax tribunals. One of these is highlighted later in this brief.
The introduction of Making Tax Digital (MTD) for self-assessment is less than two years away. As many taxpayers will need to completely change their current methods of record keeping, it is worrying that HMRC are undertaking research ‘to understand current awareness, attitudes, record keeping practice and digital ability of ITSA businesses and the role of their agents.’ Time is getting tight to carry out such a project, analyses the results and make decisions based on it.
HMRC recently issued warnings on umbrella companies and potential tax avoidance via disguised remuneration plans, implying they were aware of the issues. They are however researching how contractors are introduced to such mass-marketed disguised-remuneration tax-avoidance schemes, with the aim of understanding why contractors join them. It might be more to the point to shut down the providers of unsuitable schemes.
This report only shows external research projects so there may be internal projects covering the ‘missing’ items. Nevertheless there seem to be some surprising gaps. For instance, research into the impact of the reduction in car fuel duty as electronic vehicles become more common, as recently raised by the Public Accounts Committee. In addition, in the light of calls to reform capital gains tax and/or inheritance tax, one would have expected some research into the impact of these major changes to the UK tax system.