Improving the data HMRC collects from its customers
Published 20 July 2022
Summary
Subject of this consultation
This consultation document proposes a number of potential options for improving the range of data HM Revenue and Customs (HMRC) collects, uses and responsibly and safely shares across government. We want to ensure that the data we hold gives us as accurate and up to date picture of citizens and businesses to help build a trusted, modern tax administration system and improve government policy making.
Scope of this consultation
The consultation identifies six areas where HMRC’s data could be improved, along with specific implementation options. These are:
- the business sector of the self-employed
- the occupations of employees and the self-employed
- the location of an employment or a business
- the hours employees work
- dividends paid to shareholders in owner managed businesses
- the start and end dates of self-employment
For the purpose of this consultation, we refer to employees as those whose earnings are subject to Pay As You Earn (PAYE) and those who are self-employed as someone who has trading income.
This consultation seeks views on all these proposals before final decisions are made regarding which data to collect, from whom and from when.
Who should read this
The changes in this document will potentially affect all self-employed taxpayers, all employers, employees about whom additional data may be stored and shared, as well as tax agents and tax or payroll software providers for these groups.
We would be particularly interested in hearing from businesses with multiple branches, owner-managers of limited companies, and businesses who employ a significant number of staff through agencies or on irregular working patterns (as well as employment agencies themselves).
We would also be interested in hearing from stakeholders with a wider interest in government data use and data strategy.
Duration
This consultation will run from 20 July 2022 to 12 October 2022.
Lead official
The lead official is C. Connor of HM Revenue and Customs (HMRC).
How to respond or enquire about this consultation
Please contact responsivenessdataconsultation@hmrc.gov.uk stating the organisation you represent.
Additional ways to be involved
Please contact responsivenessdataconsultation@hmrc.gov.uk if you are interested in meeting with us to discuss this consultation.
After the consultation
We will consider all responses received by the deadline and plan to publish a response later in the year.
Getting to this stage
HMRC already collects a wide range of data from its customers and uses this successfully to drive improvements in tax administration and to target compliance interventions and customer support.
Ministerial foreword
The world is changing, and for government to be effective in the 21st century it needs to be joined up, innovative and efficient. Data, the driving force of the world’s modern economies, is central to making that happen.
Businesses, the public sector, and civil society across the UK already harness the power of data to achieve great things. But to keep pace with change, government must continue to adapt its approach to data. The government needs to consider what data it collects, including through the tax system, and how it smartly and securely uses and shares that data.
This was brought to life for me in my ministerial roles at the Ministry of Justice (MoJ). Linking data between the MoJ, the Department for Work and Pensions (DWP) and HMRC provided robust evidence to show that securing employment was key to reducing re-offending rates. One-year re-offending rates were lower for offenders who found a job in the twelve months after release. Reoffending costs the public purse around £18 billion per year. So this evidence helped make the case for improving employment outcomes for prisoners and enabled us to measure what employability interventions worked and how well.
In addition, the government’s economic response to the coronavirus (COVID-19) pandemic was only made possible through the powerful use of data to make big policy decisions and deliver our interventions. Despite the challenges we faced, the UK is emerging from that crisis with unemployment close to historic lows and remains a competitive and dynamic place to do business.
The pandemic brought into stark relief where we know too little about the citizens and businesses we serve. But looking ahead, the administrative data collected by HMRC and other departments is increasingly the best source available for key economic statistics. This data, when it is timely and linked to other information, can generate tremendously valuable insights and lead to better policy and operational decision-making across government. These are the sorts of benefits we should reap for the taxpayer and our public services.
A modern and forward-thinking data regime will ensure the UK remains a highly competitive and resilient place to work and do business. In the National Data Strategy, the government set out its ambition to harness the power of data to drive productivity, create jobs, improve public services and position the UK as a frontrunner of the next wave of innovation. How HMRC administers the tax system will be crucial in achieving this.
HMRC is already driving improvements through the Tax Administration Strategy, delivering greater resilience and ease of use for taxpayers and businesses in the tax administration system. Listening to stakeholders throughout this process is central to the department’s approach, helping HMRC maintain public trust in the use of their data.
This consultation plays an important role in delivering on these pledges by exploring how HMRC could collect additional data as part of the tax system, helping to make tax easier to get right and harder to get wrong, as well as better share data securely across government to improve policy making to provide better outcomes for citizens and businesses. We are committed to working with businesses and stakeholders to ensure that any additional burden is minimised, including options around how and when we collect any additional data.
We need a whole-government approach to meet the challenges of today and tomorrow. Smart use of data will allow us to do this. I welcome and look forward to hearing the views of businesses, civil society and other partners on what data HMRC should be collecting and how we should use it most effectively.
The Rt Hon Lucy Frazer QC MP
Financial Secretary to the Treasury
Tax does have to be taxing.
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