This is a guest post from Readies
The subject of income tax is enough to get many people steamed up; nearly everyone thinks he or she pays too much. Most of us gamely do our best anyway, but it doesn’t help that the HMRC doesn’t always make it easy. The Public Accounts Committee (PAC) has issued a report revealing that half of all calls to the taxman in the first six months of 2015 were not even picked up. That’s the equivalent of 12 million unanswered calls.
And this isn’t just a simple customer service glitch; it has consequences. MPs on the PAC speculate that millions of people filled in their tax returns incorrectly because of the failure of the HMRC to answer their calls. Some MPs expressed fears that pensioners are particularly impacted because fewer are on the Internet and they often have more complex tax arrangements.
Data released earlier in the year by the debt charity Citizens Advice indicated that HMRC took an average of 47 minutes to pick up calls, despite the declaration on its web site that calls are answered within 10 minutes. Some callers reported waiting up to four hours. Citizens Advice warned that if people aren’t able to get through to the HMRC to update information related to tax credits, they could be left short or they could overpay, which could cause debt problems. And workers who cannot fill in their self-assessment return on time and can’t get through on the phone could also be fined for missing the deadline. Gillian Guy of Citizens Advice said that people are paying the price for not getting through to HMRC.
But it seems that the tax authority is trying to come up with a long-term solution.
At present HMRC is working to develop a system of personal online tax accounts for all individuals and companies. Similar to an online bank account, people would be able to log in and view up-to-date information about their payments and liabilities. The info would already be filled in, with data relating to different taxes inserted automatically. This will make it easier to file error-free returns and harder to evade taxes. The ultimate goal of course is to get more cash into the HMRC’s coffers.
Progress is being made towards this digital breakthrough, though it’s a formidable task, with numerous technical and logistical obstacles to work through. But the ability to handle taxes at the click of a mouse is not a panacea. There are times when people will still need to talk to a live representative. Sally West, a strategic advisor with the charity Age UK, has pointed out that there should always be alternatives to accommodate taxpayers that are not online, in particular the elderly. She said, “People shouldn’t be pushed into it if they’re not comfortable.”
And lest one think that all of the digitally disenfranchised are elderly, that’s not accurate. In September 2015 HMRC published research indicating that 10 per cent of taxpayers (around 3 million) have no Internet access, with an additional 29 per cent (8.6 million) falling into the “assisted digital” category, meaning they need assistance to interact with the government online. And three in five self-employed taxpayers are digitally disenfranchised to some extent, according to the study.
If personal tax accounts are going to work there are challenges beyond the technical that need to be overcome. People have to be persuaded that this is a good thing, that the process will be easy and that their privacy will not be compromised. Paul Aplin, chair of the technical committee at the Institute of Chartered Accountants of England and Wales, which scrutinises tax policy, says that the HMRC would be well advised to “pull” rather than “push” taxpayers to move online. Otherwise people’s concerns and fears will only be exacerbated.
If you’re a student, take heed.
The digital generation should have no problem adapting to the HMRC’s brave new world when it gets here, but this raises a final point to consider in the meantime. If you’re a university student you no doubt have a lot on your mind, and taxes may be the last thing you want to be thinking about as you juggle a nonstop schedule of studies, partying and trying to make a go of your new life of independence. But if you have any income at all – whether from a part time job or from interest on a bank account or investment – there’s a very good chance that you will have some tax liability. You need to educate yourself about the tax code and your rights and responsibilities, not only to ensure that you pay enough taxes but also to make sure you are not overpaying.
It’s important that you know which income is taxable and which is not, and that you know whether or not those odd jobs you take on occasion render you “self-employed” in the eyes of the HMRC. That makes a big difference in the way you file your tax reports. For that matter it could also be beneficial to explore ways to save and earn tax-free money on the interest (think ISA). This isn’t to suggest that you stress yourself out worrying about the taxman; to the contrary, getting your tax situation under control means you will have one less worry. Be sure to keep an eye on the progress of the HMRC’s digital revolution, and who knows, maybe you’ll be the first in your hall to get the tax app when it’s released.
The good news for all of us – whether we’re uni students or not – is that the HMRC is at least trying to make it easier for us to give them our money. Well, maybe that’s not unreservedly good news, but it does make life a bit easier for all that, since most of us have to pay taxes anyway.