The government plans to move rapidly to a digital only approach to communications with HMRC to reduce admin costs and cut use of call centres

To achieve this the government intends to reform the rules about how taxpayers give consent to communicate digitally with HMRC by making it the default position.

The changes are in line with HMRC’s longer term strategy to increase the use of self-serve and digital channels and to provide services that are ‘easy to use, with increased support to remove barriers to digital services where appropriate’.

It also admits that HMRC guidance needs to be improved to make it more accessible and understandable for taxpayers.

In future, HMRC will provide less choice around the non-digital channels it offers to taxpayers such as telephone calls and post to reduce the use of these channels, where users are able to go digital.

HMRC’s aim is to improve the range and accessibility of its digital services and move as much taxpayer interaction to self-serve digital channels as possible. At the same time, HMRC will look to increase automation and the ability to self-serve in its non-digital channels wherever possible, while providing support for those who need it.

Many taxpayers already do some of their tax online, using their personal tax account, business tax account and the HMRC app. ‘As these services have been developed separately over the last few years, they have not always offered a unified and consistent experience to taxpayers,’ HMRC said.

As part of the overhaul, HMRC aims to introduce a new single customer account for all taxpayers.

HMRC aims to implement its first phase of transforming digital services through the single customer account by 2025. This will focus on transforming services for individual taxpayers and account functionality, with business needs addressed in later phases.

Part of the plan will focus on improving sign in, security and subscription to digital services. HMRC will also start rolling out features to enable taxpayers to change their details (phone numbers, emails, address, marital status) online in a single place and have those changes apply to all services to which they are subscribed.

The proposals also aim to reduce the volume of post sent out by HMRC, which currently sends around 70 million items by post annually, at a cost to the taxpayer of around £40m.

Over the next two years, HMRC will start to reduce the higher volume letters and forms it sends out on paper and will instead provide these through digital channels. It will also do this for some key inbound forms.

It has already confirmed that it will require the minority of digitally capable employers who still submit P11D and P11D(b) forms (reporting employee benefits and expenses) on paper to use online forms from April 2023. It will then move to providing digitally capable employers with P6 and P9 coding notices solely using digital methods.

HMRC is seeking views on whether all, but digitally excluded taxpayers should be required to register for income tax for self assessment (ITSA) online, through their digital tax account.

Using the digital by default approach, HMRC would assume consent from the taxpayer to receive future ITSA communications digitally, unless they opted out. HMRC would then deliver the taxpayer’s first notice to file digitally and require the first and subsequent annual ITSA returns to be delivered digitally.

Before implementing these changes HMRC said it would ensure there was a high level of taxpayer satisfaction with the digital registration service. It also said there would be sufficient advance notification of the move with advance communications with agents, accountants and taxpayers.

There are also plans to reform the repayment process with a push to digital only approach.

Recent research found that participants were keen to see fewer steps in the repayments process and some found the sign up and authentication process to be a barrier and were keen to see a simplified approach.

There was also low awareness of the process for claiming repayments digitally and taxpayers said that P800 notifications could often be missed or not acted upon.

On PAYE overpayments, HMRC plans to contact taxpayers to offer a choice between receiving a digital payment or requesting a payable order instead of sending a payable order after 21 days if the taxpayer takes no action.

This will help to prevent payable orders being sent to incorrect addresses and will allow taxpayers to self-serve and get their repayments more quickly, which will also reduce HMRC’s printing and paper costs.

HMRC is also looking at ways to improve the accuracy of tax codes and wants to better understand how it can try to get tax codes more reflective of an individual’s circumstances more quickly when circumstances change through job moves and additional of employee benefits such as company cars.

HMRC has issued a reminder to millions of married couples to make sure they are claiming the £1,260 marriage allowance tax break

While more than 2.1 million couples claim marriage allowance, HMRC estimates that up to 2.4m couples are missing out because they do not realise they may be eligible, particularly couples where one partner has retired, has given up work to take on caring responsibilities, or is unable to work due to a long-term health condition.

All claims should be made on HMRC and do not use a third party provider as they will take a large cut of the allowance through commission fees.

Marriage allowance is worth up to £252 a year, equivalent to around 10% of an individual’s tax-free personal allowance. The maximum amount that can be transferred to their husband, wife or civil partner is dependent on the personal allowance for that tax year.

It is worth noting that claims can be backdated to April 2018.

Taxpayers earning less than £12,570 a year can transfer up to £1,260 of their personal allowance to their higher earning partner, to reduce the amount of tax they pay. They can backdate their claim to include any tax year up to 6 April 2018, which could be worth up to £1,242 in tax relief.

Trusha Shah, tax manager at HW Fisher said: ‘It might not be the most romantic reason to propose, but there are tax benefits to consider if you are getting married. Eligible married couples, or those in a civil partnership can reduce their tax by up to £252 via the marriage allowance.’

Couples can use the marriage allowance calculator on gov.uk to check if they are eligible for the tax break.

Angela MacDonald, HMRC’s deputy chief executive, said: ‘We want every eligible couple to benefit from marriage allowance tax relief. Couples whose circumstances have changed – perhaps one of them has stopped working or taken a lower paid job – may not realise they are entitled to claim.

‘It’s easy to find out what you may be due – search ‘marriage allowance calculator’ on gov.uk to get started. By applying on gov.uk, rather than through a third party, you get to keep 100% of the tax relief due.’

Couples could claim marriage allowance if the following criteria applies:

• married or in a civil partnership;
• do not pay income tax, or their income is below the personal allowance of £12,570;
• their partner pays income tax at the basic rate – which typically means their income is between £12,571 and £50,270.

Married allowance can be cancelled on gov.uk if a couple’s circumstances change.

A recruiter, a pension administrator and a payroll services provider all avoided tax bills totalling £13.8m and face millions of pounds in fines from HMRC

During the month of November, HMRC identified £13.8m in unpaid tax by the businesses and individuals named in the quarterly deliberate defaulters’ list, £3.2m less than the £17m that was identified in the last quarter.

HMRC’s list names over 100 individuals and businesses who have failed to pay their taxes and been identified in the last three months.

In November, the level of penalties handed out amounted to £8m in total for outstanding tax evasion, as HMRC hammered down on deliberate tax defaulters.

At the top of the list of deliberate tax defaulters was a real estate agent who failed to pay a tax bill of £2,695,693 over a four-year period between April 2014 and 2018. Simon Karimzadeh, sole director of Euroland 3, now faces a penalty of £1,227,997 related to income from capital gains.

According to Companies House, Karimzadeh is listed as the director of Euroland 3 Limited, Euroland 2 Limited, and Euroland 1 Limited, which are all still active and trading. The companies buy and sell real estate.

Second place goes to a former technology consultant who failed to pay £993,729.79 in tax payments between April 2010 and 2019. Stephen Bernard Wheatley, former director of Westward Technology Limited and Qorbis Holdings Limited, received penalties amounting to £457,555.08.

In the meantime, a pension administrator failed to pay £729,596 worth of tax between April 2018 and 2020. Based in London, Avril Patricks Stewart Limited entered into compulsory liquidation in February 2011, and was fined £491,831.44 for unpaid tax by HMRC.

A recruitment and payroll service provider has been fined £533,270.96 for tax evasion over a two-year period. Arrow Logistics Ltd, based in London, failed to pay £627,377.61 in tax between April 2020 and 2022.

Bolton-based payroll services provider Ditto Payroll Ltd takes the fourth spot after not paying £542,238 worth of tax between April 2020 and 2022. HMRC handed the business a £515,126.31 fine and the group entered into a creditors voluntary liquidation in April 2021.

In addition, an international telecoms company called Akal Nation Limited based in London avoided paying £381,038 worth of tax between February and July 2019. HMRC handed the business a £220,049.44 fine.

Finally, a printing company based in Bradford avoided £359,358 in tax payments. A&S Printers was fined £211,122.66 by HMRC for tax evasion over a 10-year period, between May 2010 and July 2020.

HMRC will raise interest rates on tax debt from 22 November following the 0.75% increase in the Bank of England base rate

The current late payment and repayment interest rates applied to the main taxes and duties that HMRC currently charges and pays interest on are:

• late payment interest rate — 5.5% from 22 November 2022
• repayment interest rate — 2.0% from 22 November 2022

This means that the late payment interest rate will increase by 0.75% to 5.5% from 22 November 2022. The rate last increased to 4.75% on 11 October. This is the highest rate since the height of the financial crisis in January 2009.

Late payment interest is payable on late tax bills covering income tax, National Insurance contributions, capital gain tax, stamp duty land tax, stamp duty and stamp duty reserve tax. The corporation tax pay and file rate also increases to 5.5%.

The repayment interest rate will also be increased from the current 1.25% repayment interest rate to 2.0%.

Corporation tax self assessment interest rates relating to interest charged on underpaid quarterly instalment payments rises to 5.5%, up from 4.75%.

The interest paid on overpaid quarterly instalment payments and on early payments of corporation tax not due by instalments rises to 2% from 1.25%.

The latest regional HMRC hub has opened in Manchester and will accommodate 3,000 staff in a purpose built facility

The Manchester Regional Centre and UK government hub is located at Three New Bailey and was formally opened by HMRC chief executive Jim Harra on 12 October 2022.

The office’s distinctive red-brick weave references the area’s industrial heritage buildings and contains meeting rooms named after computer pioneer Alan Turing and Factory Records founder Tony Wilson, and landmarks including The Bridgewater Hall.

Harra unveiled a plaque, which is the first mounted in a HMRC building to bear the government department’s changed name, His Majesty’s Revenue and Customs, following the accession of King Charles III to the throne.

Jim Harra, HMRC’s chief executive, said: ‘Three New Bailey is a landmark building and will enable HMRC staff to work together in an inspiring modern environment which prioritises inclusive design.

‘I am delighted to formally declare our Manchester Regional Centre open.’

The seven-storey building will house around 3,000 HMRC staff, including those whose work focuses on customer compliance and borders and trade. It is also home to a team from the Valuation Office Agency.

Three New Bailey has been built using HMRC’s inclusive design guide, with features including step-free access to all levels and workspace finishes which balance colours and reduce glare for neurodiverse and visually impaired staff.

The opening ceremony was attended by Sir Dermot Turing, the nephew of Alan Turing.

Moving to regional centres will save around £300m cumulatively up to financial year 2025 to 2026 and will deliver annual cash savings of £74m in financial year 2025 to 2026.

HMRC’s other regional centre locations are Belfast, Birmingham, Bristol, Cardiff, Croydon, Edinburgh, Glasgow, Leeds, Liverpool, Manchester, Newcastle, Nottingham, Portsmouth and Stratford in east London.