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Technology is changing tax: five tips to stay on the right side of HMRC

Tax is one of the biggest costs that individuals or businesses face. Like it or not, it pays to keep on top of your tax affairs. A key part of Labour’s fiscal strategy is to ensure HMRC has the resources to collect more tax revenues. As James Murray, Exchequer Secretary to the Treasury, stated in Parliament before the summer recess, the government will "invest in HMRC’s technology infrastructure, helping to make HMRC more efficient and improve taxpayers’ experience of interacting with HMRC".

As we enter the "age of artificial intelligence (AI)", technology is beginning to impact the way in which governments around the world collect tax like never before. Whilst the UK is approaching this change at a slower pace than some other countries, keep an eye out for technology related announcements in Labour’s first budget since being elected – on 30 October.

Our predictions for the impact of technology on how everyone pays their tax are set out below. Depending on your viewpoint, these present both an opportunity and a risk to how tax is paid and administered.

With all this in mind, here are five tips to stay ahead of the game as technology inevitably impacts how your tax is paid.

  1. Education, education, education: Knowledge is power, and a basic appreciation of how the tax system works can transform your experience with HMRC.
  2. Register for an HMRC personal tax account: These accounts show the information HMRC uses to assess your tax liability and provide guidance links.
  3. Be proactive: Conduct a review, at least annually, of your tax compliance position to plan filings and take advantage of tax reliefs.
  4. Make a personal "data map": Ensure you understand where the information you need to calculate your tax liabilities comes from, that it’s accurate and as easy to compile as possible.
  5. Seek professional advice for complex matters: The UK tax system is complex. Professional tax advisers can help you manage your tax affairs and will increasingly build knowledge on how to use AI and other technologies safely when it comes to obtaining tax advice.

Ensure your adviser is reputable and supportive. Look for those with links to relevant leading professional bodies, such as the Chartered Institute of Taxation, the Institute of Chartered Accountants in England and Wales and the Association of Taxation Technicians.

authors:chris-etherington