On 23 March 2021 the UK government published a call for evidence entitled: The Tax Administration Framework: Building a 21st Century Tax System.

The government has already published a ten-year tax administration strategy called Building a trusted, modern tax administration system. The latest call for evidence is looking for comments on how the underlying tax administration can be adapted for future developments. In tax administration The document includes questions based on the following issues:

Challenges from the existing tax administration framework

Some parts of the tax administration framework were not designed for a modern, digital tax system. The age and complexity of the tax administration legislation has contributed to the number of cases being taken to the Tribunals and the courts, owing to lack of clarity on whether the taxpayer or HMRC has conformed to the framework legislation. This is a burden to the court system and causes more uncertainty for taxpayers and HMRC.

Tax administration laws

The Taxes Management Act 1970, on which the administration of direct taxes is based, is fifty years old. Subsequent changes to the tax administration framework are difficult for taxpayers to track and could create issues and disputes. The calculation and payment of tax should be more straightforward for personal taxpayers, for example using an online account. The legislative framework must be adapted to support the changes.

People entering and leaving the tax system

There are different processes for tax registration, subscription and initial introduction processes for different taxes and duties. Processes for keeping details up to date and deregistering also differ. There is therefore room for rationalising these systems.

Calculating and Assessing Tax Liabilities

Better use of taxpayer data could allow assessments to be carried out in an improved way. There is a need to update and better define the roles and responsibilities of the taxpayer, HMRC and third parties. Digital innovations and modernisation by HMRC and other organisations, including Making Tax Digital (MTD), should open up methods for simplification and improvement.

Using data and information to facilitate tax compliance

Making better use of a broader set of data sources (from within government and from third parties) would allow HMRC to better assess the taxpayers’ circumstances and obligations, subject to confidentiality considerations when shared data is used.

Tax Payments and Repayments

The processes, time limits and frequency of required payments differ in relation to different taxes and the treatment of different taxpayers or sectors of business and industry can differ. More harmonisation is necessary in these areas.

Methods of verification, sanctions and safeguards

HMRC needs to establish where accountability lies for the completeness and accuracy of data in future situations where a tax return is pre-populated or third-party information is provided. This requires further harmonisation of aspects of tax administration powers, penalties and the taxpayer safeguards necessary when using a digital, real-time tax system.

Closing date

The UK government is requesting comments on the issues by 13 July 2021.