January is a time when people typically plan for the year ahead. Bearing this in mind, Matt Lewis has made a few 2105 HMRC predictions about what 2015 may have in store, based on his 20+ years of experience with all things tax, VAT and HMRC-related.
1) Change in government could change the tax rules
Regardless of what government we end up with after the elections, they will continue the drive to collect as much tax as they’re due. And there will continue to be a big focus on tax-evasion as well a drive to make sure that companies that operate in the UK pay ‘their fair share of tax’.
2) We hope that tax will continue to benefit individuals
Those little tweaks to the tax system - like increasing personal allowances and doing away with P11D expenses reporting, will have very little impact in 2015: but at least it’s something, rather than nothing. It’s a welcome change as we’ve had years and years of more and more things being taken away – the current government tried to give something back. Let’s hope it continues.
However, any new government can re-think the whole thing. Ultimately they have to do their best to budget the books and a change of government could immediately change things in the new autumn statement.
Typically, budgets and autumn statements are forward-thinking – to make changes within the next few years as it takes a long time to go through the legislative procedures to get the law written in the first place. Any new government coming in will be subject to what has been announced. They can change it: but they’ll have to seriously consider who they’d upset by changing things.
3) It’s going to be another tough year
Confidence is up. Businesses in certain industries will keep growing. But there will still be a lot of cost-cutting by the government and, at some point, there will be a need to be a re-balance between being able to make efficiencies and tax intake.
The autumn statement indicated that the tax intake was much lower than expected. This could be for a lot of reasons: there are a lot more lower-paid jobs around, pay hasn’t caught up with optimism, companies are doing better – but there’s a massive lag between increased profits and payment of tax bills.
4) The government will look more closely at what they can do with the data they’re now collecting
There used to be a similar lag for income tax. Previously, monthly salaries would be taxed regularly, but ‘other’ tax would be paid once a year. Last year, with the introduction of real-time information, businesses do your year-end reporting every month – to balance out that tax throughout the year. It’s a big transition and has taken a long time. It has relied on companies putting in the relevant software, but it has also given the government real-time information about the state of various elements of both business and salaries.
The government will want to interrogate its data – but as a lot of expenses are not reported on P11Ds any changes they make based on data are likely to be about benefits in kind, because these are reported.
But this is still in its infancy – they don’t have the full benefits of this, yet –more can be done. Once they see the value of the visibility that real-time information brings them, expect more reporting requirements!