Administration of Tax

Digital Tax Accounts

The Government will abolish the tax return for millions of individuals and small business through the introduction of digital tax accounts. A roadmap setting out the policy and administrative changes will be published later this year. In addition, the Government will consult on a new payment process to support the use of digital tax accounts that allow tax and National Insurance contributions to be collected outside of PAYE and self-assessment. This will be legislated for in the next Parliament.

Direct Recovery of Debts due to HMRC from Debtors’ Bank and Building Society Accounts

HMRC will be able to collect payment of tax and duties directly from credit balances in debtors’ bank and building society accounts, including ISAs, without first having to apply to the courts. HMRC will only take action against debtors who owe over £1,000 of tax or tax credits. They will always leave a minimum aggregate of £5,000 across debtors’ accounts, and will only put a hold on funds up to the value of the debt. Secondary legislation to be published shortly will set out details of the process and safeguards for taxpayers.

The Government intends to legislate this measure in a future Finance Bill.

HMRC Tax Enquiries – Closure Rules

The Government has consulted on a proposal to introduce a new power, enabling HMRC to refer matters to the tax tribunal with a view to achieving early resolution of one or more aspects of a tax enquiry, whilst leaving other aspects of the tax enquiry open. The Government is currently considering the consultation responses.
UK’s Automatic Exchange of Information Agreements

In compliance with the UK’s obligations to improve international tax compliance, regulations will be introduced to create due diligence and reporting obligations for UK financial institutions. With effect from 1 January 2016, the obligations will require financial institutions to:

  • identify accounts maintained for account holders who are tax resident in jurisdictions with which the UK has entered into an agreement to exchange to help tackle tax evasion; and
  • collect and report information to HMRC.

The regulations also revoke and replace the current implementing regulations for the UK’s exchange of information agreement with the USA (FATCA). These new regulations will have effect 21 days from the date that they are laid.