Making Tax Digital - Beware!!
In the government policy paper, updated on 1 April 2019 (this is no joke) “Overview of Making Tax Digital” it opens with the following:
“Making Tax Digital is a key part of the government’s plans to make it easier for individuals and businesses to get their tax right and keep on top of their tax affairs”.
HMRC’s ambition is to become one of the most digitally advanced tax administrators in the world.”
However, as Michael Leather of Leathers says “Beware of ambition” – especially HMRC’s – there is more to this story than a carefully managed press release would suggest. With Tax Tribunals on the increase, in fact a 43% increase from 5161 cases in 2015-16 to 7377 in 2017-18, and a far greater “data” pool to access information from, HMRC are becoming increasingly intransigent in their approach believing in many cases that they have the data to support the actions.
What the press release/policy paper doesn’t say is that behind the scenes HMRC has developed and has been constantly refining a data programme called “Connect”.
Connect is able to access vast tracts of data be it employment date (from PAYE), banking data from financial institutions (around the world), but Connect will go further, and HMRC have been explicit as to the level of data they will start to collect (and have already been collecting) in the guidance published on 19 March 2019 “Transaction Monitoring Privacy Notice” in relation to Making Tax Digital.
The information available to HMRC isn’t also limited to UK shores, data exchange now automatically occurs between the UK and over 100 overseas tax jurisdictions. This exchange of data has allowed HMRC to collate and target taxpayers with foreign income and gains.
As Michael Leather goes on to say “It is important that taxpayers ensure their affairs are in order but it is equally important that taxpayers start to think about how they run their affairs as the days of “sticking a finger in the air and testing the wind” to plan any transaction have definitely disappeared”, and with the Revenue’s reach and access; disclosure, detail and planning on all taxes, be it VAT, Capital Gains or Inheritance Tax will then become paramount.
If you need help with your tax affairs or have any queries, please contact Michael Leather on 01423 740 761