Papering over the cracks

HMRC has recently notified agents and affected taxpayers that, due to a low demand for paper filing of self-assessment tax returns, it will no longer automatically issue paper returns by post. HMRC claims that almost 97% of returns are filed online, either using HMRC’s online portal or commercial software. But by removing the automatic issuing of a paper return to those who filed on paper last year, what happens to the 3% of taxpayers who are either unable or unwilling to use the online system? 

According to HMRC, there are around 135,000 taxpayers who submit paper returns. This figure includes those who are unable to file online as they are digitally excluded, those who simply prefer to submit a paper return, and a significant number who need to file on paper as the online services portal simply cannot cope with the complexity of their tax calculation and a paper filing is the only way to correctly return the position to HMRC.

Whilst there is not a blanket removal of the ability to file paper returns, the key difference going forwards is that it will be more difficult to obtain a paper return to complete. Alongside the removal of the automatic provision of paper returns, taxpayers will be unable to download a return from HMRC’s website. Taxpayers wishing to file a paper return will now have to call HMRC to request a form.

The further reliance on the HMRC phonelines is likely to concern taxpayers, particularly following the recent HMRC monthly performance reports for January 2023 and February 2023, which show only 60% and 64.7% respectively of calls made to HMRC were handled. Whilst HMRC stresses that online filing is more accurate and quicker, the removal of the option to download a paper return from its website is likely to result in additional calls to the already overstretched phonelines.

The removal of the facility to download a self-assessment tax return from the HMRC website is in direct contrast to the addition of UK property capital gains tax forms to those available to be downloaded. These forms were added in February 2023 to enable the digitally excluded and those who fall within one of the online filing exemptions to obtain the form without needing to call HMRC. 

With calls for tax administration to be made simpler, and a likely increase in the number of individuals who will need to file a return as tax rate band thresholds and allowances are reduced or frozen, the restriction of ways in which to access a self-assessment tax return seems ill-timed. In particular, it adds potential difficulty for taxpayers within self-assessment for the first time to meet their new obligations.