Government data grasp concerns CIOT

In a recent consultation, HMRC explored potential options for improving the range of data it collects, uses and shares across government. Noting that the COVID pandemic brought into sharp relief how little the Government knows about its citizens and businesses, the consultation claims that improving the administrative data collected by HMRC and other departments can provide the best source available for key economic statistics and lead to better policy and operational decision-making across government.

John Barnett, Chair of CIOT’s Technical Policy and Oversight Committee, said:

“We are concerned that gathering this additional data will place significant extra administrative burdens on employers and businesses, for little or no direct benefit to them.

“We recognise that the Government wishes better to target investment and support, helping grow the economy and deliver improved policy outcomes. But such decisions need to be evidence based. While the tax system may be as sensible a way as any other of collecting this data, some of the data - for example employee occupation and location data - may be difficult to collate and provide to HMRC in a cost-efficient way.”

John Barnett said:

“CIOT members continue to contact us about their frustration at HMRC’s poor service levels and response times, with many saying it is hard to get any sort of response from the government department at all.²

“We can see that there are potential tax benefits in collecting some of the data, for example in helping to target HMRC’s compliance activity better. But we question whether HMRC have the resources to handle the collection, analysis and processing of this amount of additional data. Is it a good use of HMRC’s limited resources to handle this data, much of which is intended for use by other government departments?

“Unless additional resources are made available specifically to cope with the processing of this additional data, we urge HMRC to prioritise improving the delivery of its existing services and compliance activity before taking on further responsibilities. Even if additional resources are made available to HMRC, we strongly suggest it is better used to bring service standards back to an acceptable level.”

Commenting on the need to expand HMRC’s statutory duties, John Barnett continued:

“If this does go ahead, it will be necessary for Parliament to grant new powers to HMRC to enable the additional data to be collected. The collection of this sort of data – for example, business sector, occupation and location - on a mandatory basis is currently outside of the functions of the Commissioners for HMRC because it is not relevant to the collection and management of revenue or tax credits. It also appears that other changes will be needed because existing legislation appears to preclude the sorts of cross-government sharing of data implied by the consultation document.³

“We also have concerns about the penalties taxpayers may face if this is made compulsory.  While HMRC say they will take a reasonable and proportionate approach to penalties, we think that there should be a separate penalty regime – which is not tax related - if taxpayers omit or provide incorrect data unrelated to their tax liability. If you fail to provide a business sector code, for example, that should not make the whole tax return incomplete.⁴ HMRC should also not be able to extend their usual time-limits for enquiring into tax returns simply because, for instance, one small piece of non-tax data has not been provided.”

Notes for editors

1. The CIOT’s response to HMRC’s recent consultation on “Improving the data HMRC collects from its customers” can be found here.  HMRC’s consultation document can be found here. It identified six areas where the Government considers that the data HMRC collect could be improved, along with specific implementation options. These are:

• the business sector of the self-employed   
• the occupations of employees and the self-employed
• the location of an employment or a business
• the hours employees work 
• dividends paid to shareholders in owner managed businesses     
• the start and end dates of self-employment

2. In June 2022 the CIOT, along with other professional bodies such as Association of Taxation Technicians, wrote a joint letter to HMRC to express their and their members’ concerns regarding HMRC’s poor service levels– see here.

3.  Section 17 CRCA 2005 ‘use of information acquired by HMRC’, section 18 ‘confidentiality of information’, section 19 ‘wrongful disclosure’, section 20 ‘public interest disclosure’ and section 21 ‘disclosure to prosecuting authority’ may need updating as the existing legislation appears to preclude the sorts of cross-government sharing of data implied by the consultation document.

4. Sectoral data is not necessary ‘for the purpose of establishing the amounts in which a person is chargeable to income tax and capital gains tax for a year’ (section 8 TMA 1970) since it is nothing to do with tax.