The OTS report on options for simplifying the process of reporting and paying tax for the self-employed and landlords of private residential property recommends making the personal tax account into an ‘individual tax account’, which integrates with the business tax account.
The report’s recommendations fall into three main areas:
development of HMRC’s personal tax account into a fully-integrated ‘individual tax account’, providing an end-to-end tax reporting and payment service;
the potential for third parties to make reports of certain information directly to HMRC for taxpayers in specific sectors, such as the taxi/private hire market and holiday lettings market; and
investigating which types of business would benefit most from being able to report data to HMRC more regularly and pay tax through the individual tax account.
The OTS found lower and middle-income taxpayers showed the greatest interest in making more regular tax payments. Higher-income taxpayers and those with more complex businesses, as well as tax agents, were generally unwilling to pay tax before it was due.
The report does not consider further the idea of a withholding tax, where third parties deduct amounts from payments due to self-employed taxpayers and send these to HMRC on their behalf. However, the OTS suggests HMRC could investigate such a system if the recommendations for third-party reporting, fully reflected in individual tax accounts, were to be successfully implemented.
OTS tax director, Bill Dodwell, commented: ‘The key recommendation in this report is for HMRC to continue its work on the personal tax account further, to enhance its capabilities and integrate it with the business tax account’.
‘In some sectors, third-party reporting could help. Further in-depth work is needed to test this and potentially develop a workable plan’, Dodwell added.
Victoria Todd, head of the CIOT’s Low Incomes Tax Reform Group (LITRG), believed self-employed people would find it helpful to be able to make ad hoc payments.
The LITRG saw potential for the proposed individual tax account, integrated with the making tax digital programme, to ‘pave the way for abolishing the payment on account regime, which many people find confusing and which often creates inadvertently unexpectedly large tax bills’.
The OTS report on options for simplifying the process of reporting and paying tax for the self-employed and landlords of private residential property recommends making the personal tax account into an ‘individual tax account’, which integrates with the business tax account.
The report’s recommendations fall into three main areas:
development of HMRC’s personal tax account into a fully-integrated ‘individual tax account’, providing an end-to-end tax reporting and payment service;
the potential for third parties to make reports of certain information directly to HMRC for taxpayers in specific sectors, such as the taxi/private hire market and holiday lettings market; and
investigating which types of business would benefit most from being able to report data to HMRC more regularly and pay tax through the individual tax account.
The OTS found lower and middle-income taxpayers showed the greatest interest in making more regular tax payments. Higher-income taxpayers and those with more complex businesses, as well as tax agents, were generally unwilling to pay tax before it was due.
The report does not consider further the idea of a withholding tax, where third parties deduct amounts from payments due to self-employed taxpayers and send these to HMRC on their behalf. However, the OTS suggests HMRC could investigate such a system if the recommendations for third-party reporting, fully reflected in individual tax accounts, were to be successfully implemented.
OTS tax director, Bill Dodwell, commented: ‘The key recommendation in this report is for HMRC to continue its work on the personal tax account further, to enhance its capabilities and integrate it with the business tax account’.
‘In some sectors, third-party reporting could help. Further in-depth work is needed to test this and potentially develop a workable plan’, Dodwell added.
Victoria Todd, head of the CIOT’s Low Incomes Tax Reform Group (LITRG), believed self-employed people would find it helpful to be able to make ad hoc payments.
The LITRG saw potential for the proposed individual tax account, integrated with the making tax digital programme, to ‘pave the way for abolishing the payment on account regime, which many people find confusing and which often creates inadvertently unexpectedly large tax bills’.
