Digital account timeline overview
First announced in Budget 2015, news that HMRC wants digital accounts to replace traditional annual tax accounts created much debate.
Now, further details of what this transitional process will look have been provided by HMRC:
- July – September 2015 – business tax accounts, PAYE update services and married couple’s allowance
- October – December 2015 – personal tax accounts for self-assessment and tax credits
- January – March 2016 – calculating re-payments for national insurance and PAYE.
HMRC wants to introduce digital tax accounts in order to simplify the process for everyone involved.
However, some members of the Public Accounts Committee (PAC) have expressed concerns that HMRC will not be able to deliver on its proposed timetable.
In the summary of the PAC report into the digital transition, the committee stated:
“HMRC’s record in managing the Aspire contract and other IT contractors gives us little confidence that HMRC can successfully achieve this transition or that it can manage the proposed model effectively to maximise value for money.
“HMRC also demonstrates little appreciation of the scale of the challenge it faces or the substantial risks to tax collection if the transition fails.”
Benefits of digital tax accounts
The cost benefits of HMRC running more of its processes through its own IT systems will be a 24% saving on its £800 million annual IT budget by 2020/21.
But HMRC also wants to stress a number of other key benefits to taxpayers:
- view and manage their information
- pay tax without having to provide HMRC information it already has
- digital tax accounts can potentially be linked to business accounting software
- simpler and clearer personalised support.