Storage Questions Raised by HMRC Overhaul

The latest Government announcement regarding planned changes to the personal taxation system raises several questions: notably so, given the current state of the UK’s financial affairs.  The implementation of a system whereby personal tax information is accessible on-line is hoped to clarify and simplify the process of self assessment and reduce the number of reconciliation errors.

The main concern for a significant volume of the UK population is the security of the personal data stored within the proposed on-line facility.  Data storage, and its associated security, is at the forefront of many individuals’ minds due to the ever increasing levels of fraud committed via the on-line world.  Despite similar systems already being in operation in the Republic of Ireland and Denmark, little has been mentioned about how secure the data storage will be.

However, anything which will make the process of understanding personal taxation calculations can only be a positive thing.  Exchequer Secretary, David Gauke said: “At the moment, for a lot of people, the tax line on their pay slip is the only time they see just how much they're paying in tax, but the government doesn't think that's good enough.
“We plan to lift the lid on tax so that people understand how much they are paying, what their overall tax rate is, and what they should be paying, in the same way that the government has lifted the lid on what they are paying for.”

Providing tax payers with a clarified process of completing their self assessment will undoubtedly bring improvements.  However, providing pre-filled self assessment forms and the ease with which they can be amended is something which must be given serious consideration by HMRC.  The number of individuals with access to the internet is still relatively low so actions will need to be taken to accommodate this.

Secure Storage & Clarity

The proposed on-line facility is also intended to benefit employers too.  There is a pilot scheme to ensure PAYE, tax and national insurance details are up-dated monthly, to enable RTI (real time information) to be used by HMRC and avoid errors.  Recently up-graded IT systems at HMRC have highlighted a significant volume of tax calculation errors, resulting in refunds being paid out along with demands for underpaid tax.



There are positives and negatives with most proposed changes, especially one of such magnitude.  The saving associated with this new system is likely the most favourable factor: the new system is predicted to save £1 billion in administrative costs.  A saving the UK Government can ill afford to pass-up.  Provided the UK tax payers can been reassured enough on the levels of data storage security put in place, as well as a smooth transition period, the new system will hopefully fulfil expectations.



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