Making Tax Digital
Businesses, self-employed people and landlords who already keep digital records and provide regular digital updates to HMRC will be able to make tax payments on a pay-as-you-go basis, which will enable them to choose a payment pattern to suit them and therefore manage cash flows better. This will be consulted on during 2016 for inclusion in Finance Bill 2017, to come into effect from April 2018. Detailed proposals are also to be published for parts of the Making Tax Digital programme that have been announced previously.
HMRC’s customer service
Individuals and businesses should be able to get the help and support they need from HMRC, when they need it. By the end of this Parliament, HMRC’s digital transformation will have made it quicker and easier for customers to report and pay their taxes online. But the government recognises that more needs to be done now, and is investing £71 million to improve the service it provides taxpayers. This investment will deliver: a 7-day a week service by 2017, with extended hours and Sunday opening on online services and the tax and tax credits phone lines, so that people and businesses have more opportunity to contact HMRC outside of working hours improved telephone services and reduced call waiting times by recruiting over 800 new staff into HMRC call centres a dedicated phone line and online forum for new businesses and self-employed individuals to get help and support about filing and paying their taxes for the first time, and on the transition to using digital services.
Tax avoidance and evasion
Over successive Budgets the Chancellor has announced further ways of tackling tax avoidance. This year he announced that public sector organisations will have a responsibility to ensure that those working for them pay the correct amount of tax rather than gaining an advantage by working under a personal service company (PSC). From April 2017, individuals working through their own company in the public sector will no longer be responsible for deciding whether the intermediaries legislation applies and then paying the relevant tax and NICs. This responsibility will instead move to the public sector employer, agency, or third party that pays the worker’s intermediary.
The employer, agency or third party will have to decide if the rules apply to a contract and if so, account for and pay the liabilities through the RTI system and deduct the relevant tax and NICs.
Many public sector bodies are already required to seek assurance that some of their workers are paying the correct employment taxes under Government rules on off-payroll appointments in the public sector. This change will reinforce and extend this requirement across all public sector bodies and all workers engaged through a PSC. Where a public sector body engages a PSC through an agency, or other third party, the party closest to the worker’s limited company in the supply chain will be required to comply with the rules. HMRC will provide help for public sector employers and agencies with their new responsibilities. In partnership with stakeholders, HMRC will introduce clear, objective tests for employers to use to decide at the point of hire whether or not they need to even consider the new rules and then to quickly and decisively identify those engagements that are clearly caught by the rules. For cases that are less clear cut, HMRC will develop a simple and straightforward digital tool to provide employers engaging an incorporated worker with a real-time HMRC view on whether or not the intermediaries rules need to be applied. HMRC will be designing these new tools and tests in consultation with stakeholders.
The existing intermediaries rules will continue as they are now for non-public sector engagements. Businesses and agencies working outside of the public sector will also be able to make use of the new digital tool.
Tax-Free Childcare
As we know the government will introduce Tax- Free Childcare in early 2017 and it will be gradually rolled out to children under 12, in a managed way. Parents of the youngest children will be able to enter the scheme first and it will be open to all eligible parents by the end of 2017. The existing scheme, Employer-Supported Childcare, will remain open to new entrants until April 2018 to support the transition between the schemes.
CIPP comment ESC remaining open is a sensible option as if an employee in an existing scheme decides to join the TFC scheme and then realises that they are subsequently worse off, under the original plans they would not have been allowed to revert back. The transition now makes that possible so individuals can choose the most financially viable scheme for them.
CIPP Policy News Journal
25/04/2016, Page 179 of 453
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