HMRC reform: digital transformation

In addition to the e-invoicing initiative , the Chancellor also recently outlined reforms to modernise HMRC through a Digital Transformation Roadmap, which is expected in Spring 2025.

This roadmap will aim to create a ‘digital-first’ tax system, although it will include measures to ensure support for those unable to go fully digital.

In addition, James Murray, Exchequer Secretary to the Treasury, with responsibility for the UK’s tax system, has been appointed as the Chair of the HMRC Board. He will oversee HMRC’s efforts to ‘close the tax gap’ and collect tax that the government believes is being underpaid.

HMRC has a target of recruiting an additional 5,000 compliance staff to help.

What impact might this have on your business?

• With HMRC focusing on closing the tax gap, businesses should expect the chances of additional scrutiny on their records, Returns and any errors HMRC identify to increase. It will be more important than ever to ensure records are well kept and deadlines met. 
• It’s likely that random inspections will increase, though this will only happen once the new compliance staff are in place and trained. That gives business owners time to make any improvements they feel may be needed! 
• Consider a scheme that covers the cost for advisors to defend your position in the event of an enquiry. These schemes, such as our Fee Protection Scheme, can enable an advisor to restrict the breadth of any enquiry, and conclude matters far more efficiently than may be the case if a business owner handles matters themselves. NB: If you’re a client of ours, you’re already a member of our scheme, as we automatically enrol everyone and cover the cost ourselves. We feel the peace of mind provided is vital.
• For most businesses, operating digitally is now a day-to-day norm. However, with HMRC moving to a ‘digital-first’ approach, anyone relying on paper-based or archaic computer systems is likely to be forced to upgrade to an online solution. 

If you’re worried about any aspect of the above, from your record keeping to Enquiry Fee Protection, please get in touch.