ICAEW’s Tax Faculty outlines proposals announced at Spring Budget 2023 that aim to improve and simplify tax administration. Disappointingly, there is no additional funding to improve HMRC’s service performance.
Prior to the Budget, ICAEW called for action to address poor HMRC service standards. Unfortunately, the government has not responded, although it is not clear whether HMRC themselves requested additional funding.
The Budget documents do include several proposals and consultations on simplification and tax administration. Further measures are expected to be announced on Tax Administration and Maintenance (TAM) Day later in the Spring.
The announcements at Spring Budget 2023 include:
Cash basis reform
The government is consulting on reforming the cash basis for the self-employed. Under consideration are:
- an increase to the threshold;
- making the cash basis the default option with an opt out for standard accounting (which would align with the treatment of property income);
- an increase to the limit for interest relief; and
- a relaxation of relief for losses.
Please send any comments to Richard Jones.
Tax Administration Framework Review – modernising income tax services
The government has published a discussion document exploring possible changes to income tax administration. Areas explored in the discussion document include:
- developing and promoting the use of HMRC’s digital services, including moving to digital by default for certain letters and forms;
- PAYE pain points, including changes of circumstances and coding notices; and
- income tax self assessment – a review of HMRC’s administrative criteria for issuing a notice to file a tax return.
Please send comments to Caroline Miskin.
Allowing agents access to register clients for payrolling benefits in kind
HMRC plans to allow authorised tax agents to register their employer clients for the payrolling benefits in kind service. Further details and timing are not yet available.
HMRC guidance and forms for small businesses
HMRC is to collaborate with businesses and representative bodies to undertake a systematic review of tax guidance and forms for small businesses over the next 24 months.
Rendering void assignments of income tax repayments
As previously announced, assignments of income tax repayments will be rendered void. This will be legislated for in the Spring Finance Bill 2023 and will apply to income tax repayments received by HMRC on or after 15 March 2023. The Tax Faculty understands that this date was selected to ensure that the measure was in place in advance of PAYE repayment claims for 2022/23. HMRC will continue to accept nominations of specific income tax repayments to third parties.
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