Plenary session
Keynote speaker Edward Troup, executive chair and permanent secretary, HMRC
Edward’s talk focussed on the challenges facing tax collection and the opportunities which digitalisation and the use of data offered to HM Revenue & Customs (HMRC). Edward thanked the payroll professional community for the work that they do in maintaining the steady flow of tax revenues through PAYE (pay as you earn) and National Insurance contributions (NICs) and noted the challenges that changing ways of working posed both for the tax administration and for the payroll industry. Commenting that PAYE is the great tax collecting invention of the modern age Edward provided an outline of its origin: PAYE was set up in the early 1940s for the purpose of increasing and improving income tax collection in order to help pay the costs of the second world war. The PAYE system today is built around the concepts of the original paper based system but is being progressively modernised. Observing that tax collecting is never easy, Edward quoted Samuel Johnson’s definition of excise: “A hateful tax adjudged by wretches hired by those to whom excise is paid.” Today, however, tax is seen as a responsibility not an imposition. Tax collection depends on the confidence of the individual and business in both the tax system and those who operate it. It also relies on ‘responsible’ behaviour by taxpayers. Some 90% of tax is paid without intervention by HMRC albeit perhaps not always regarded as ‘voluntarily’ by those whose income is subject to PAYE. Edward moved onto to talk about how HMRC is changing and modernising. HMRC’s strategy is to move more taxpayers into voluntary compliance and to drive down the tax gap [which is the difference between the amount of tax due and the amount collected]. HMRC are achieving this through digital transformation and better use of data. Edward explained HMRC’s drive for making tax digital, and outlined the importance of personal tax accounts (PTAs) which are at the heart of HMRC’s next great modernisation. They are prepopulated with data (e.g. income and tax), and are attracting
large numbers of registrations and will offer further services as the service continues to develop. HMRC’s better use of data will enable tailoring services and improvements to compliance. Payroll professionals have a role and responsibility for data quality and for making sure that remuneration arrangements are properly reported. Edward commented that the world is changing. There has been significant political change and the UK has a new government post the EU referendum. Devolution is driving change which has implications for payroll – for example, the Scottish rate of income tax; further developments in Wales may arise in the future. Though there have been new policies such as the apprenticeship levy, student loans and the marriage allowance, Edward observed that tax policy is not changing as rapidly as ‘economic’ changes such as increases in part-time working, working in retirement, self-employed income and property income. Moving onto avoidance and behavioural responses to the tax system, Edward mentioned the differential tax rates between employment, self-employment and incorporation: these reflect policy choices but create incentives. Payroll professionals have responsibility to help manage issues such as ‘IR35’, umbrella company legislation and disguised remuneration. Edward expressed concern that across the world we are seeing a loss of confidence in traditional institutions – from which tax administrations have not been immune. However, society depends on tax to support public spending. Public confidence in the tax system depends on understanding. Edward questioned whether PAYE is a victim of its own success as making tax collection too painless to be understood. Edward explained that his responsibility is to ensure that the UK has an effective tax administration in which the public has confidence and which delivers a high quality public service. Through their role in tax collection, payroll professionals help delivery of that service.
Brief history Edward Troup was educated at Oundle School, and studied mathematics at Corpus Christi College, Oxford, graduating with a BA in 1976 and an MSc in 1977. Edward is a qualified solicitor with experience gained in the private sector and as an adviser to the Chancellor of the Exchequer and latterly as a director general in HM Treasury before joining HMRC in 2012. As HMRC’s executive chair and permanent secretary, he chairs the HMRC Board which in turn is responsible for shaping and developing the department’s strategy. As HMRC’s most senior tax professional, Edward oversees the department’s relationship with HM Treasury and provides tax policy advice to ministers.
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