This week HMRC shared details of their latest wheeze – the “simple self assessment”. This involves HMRC automatically populating/issuing hundreds of thousands of tax returns based on what they believe they know about taxpayers from interrogating vast data collection systems. It has been presented as being something to “make life easier for millions of tax payers” and it could even spell the end for the much-despised penalty for submitting a tax return late. This sounds like something we would all welcome but is there really such a thing as a free lunch? We wanted to find out…
Background recap: HMRC’s “fire first, ask questions later” policy is their preferred way to get what they want without having to wait a long time to get it. Back in 2014, frustrated with the amount of time/effort in challenging legal tax avoidance schemes in court, APNs expedited billions of additional tax and threw thousands into financial peril. The Government’s PR machine continually spouted rhetoric about it tackling only those not paying “the right amount of tax” and who could easily afford to pay up. The mainstream UK media gladly helped brainwash large swathes of the public into believing that the end justified the means. Unsurprisingly, few if any media outlets are brave enough to question this latest development from HMRC.
“Front-loading” the additional tax collection obviously process saves HMRC time and increases their tax yield. This is one of their stated objectives. The latest instrument in that ongoing mission is issuing taxpayers with automatically generated self-assessments based on the information already held within HMRC’s sophisticated systems. It is aimed initially at two groups of taxpayers (pensioners and PAYE employees) however it seems highly likely to us this is simply a test bed before the ideas is rolled out to much wider groups of taxpayers.
Simple Self Assessment should concern everyone for two main reasons;
Firstly, HMRC’s knows *alot* about its subjects via the so-called “snooper computer” Connect. Their data profiling capability is perhaps second only to the FBI. Not only does HMRC have information from your employers, but they also have intelligence from your bank, online auction site, stockbroker, insurance company, estate agent, internet service provider, etc. This will inevitably lead to a number of assumptions and theories being being proposed about your income, which will likely (just as those who received APNs) mean you are guilty until proven innocent. HMRC has a woeful track record for making mistakes with their base data and computations, which like with APNs will result in over-inflated demands being issued which send recipients into a tailspin.
Secondly, HMRC appear to dislike the notion of taxpayers having sufficient time and/or opportunity to challenge back on any material decisions that affect them, so have imposed a time limit of just 60 days in which a taxpayer can challenge the automated self-assessment outcome. This appears to where HMRC’s mask slips and there intentions become more clear. It is unfair so will be difficult to defend if this is really about making taxpayer’s lives easier.
In summary, this looks like little more than a Trojan horse, whose true contents are to paint honest taxpayers into a corner with bullying tactics in the hope they will panic and simply accept HMRC’s view of the situation. In that regard, the simple self assessment is surely anything but simple. Anyone receiving a simple self assessment over the next few months is encouraged to;
- Not panic and read all the information sent to them fully
- seek professional advice from an advisor you trust to act in your best interests.
- Locate/ keep to hand any paperwork that might be useful in the event of needing to defend your position to HMRC.