In the latest tax notice to accountants, HMRC announced that it had bowed to pressure from the various accountancy bodies, the FSB (Federation of Small Businesses), Age Concern and various other bodies, that it had decided not to scrap paper tax returns. A victory for commonsense you might think, but as is HMRC’s way, there was a sting in the tail of the announcement.
Scrapping Paper Returns: What have HMRC proposed
Whilst HMRC promised to maintain the issue of paper self-assessment (SA) tax return forms, they also said that w.e.f. the 2022/23 tax year, you will no longer be able to download the form from gov.uk. and print it off yourself.
So, for tax returns due to be submitted post April 5th 2023, if a taxpayer wants to submit their tax return on paper, and don’t forget some people have no other choice, they will either have to ring HMRC and request a form be issued or buy some relatively expensive commercial software. This however is not an option for a number of mainly older or disabled taxpayers who do not use or even own a computer.
Scrapping Paper Returns: It’s in the post
HMRC are currently writing to the almost 150,000 taxpayers who normally file their SA tax return on paper telling them they won’t automatically receive a tax return form this year. The taxpayer is asked to file their tax return online by going to gov.uk and searching for “self-assessment”, then choosing “file your self-assessment tax return online”.
Of course, many people in rural areas and on many of the Scottish islands do not have a reliable internet access and will have difficulty following these instructions, in which case HMRC advises them to ring the self-assessment form order line on 0300 200 3610 to ask for a paper tax return.
Scrapping Paper Returns: I can’t file online, what do I do?
HMRC says that 385,000 taxpayers filed paper SA tax returns for the 2021/22 tax year, so clearly only around 38% of those individuals are being nudged to file online. There are certain categories of taxpayer who are prevented from filing their personal tax returns online, for example taxpayers who have special security concerns, such as MPs, certain civil servants and senior members of the armed services.
These individuals normally have their tax affairs dealt with by HMRC’s Public Department 1 and are exempt from the requirement to file online. Taxpayers whose tax affairs fall into one of the exclusions from SA online filing are also required to file a paper tax return. In such cases the taxpayer can complete their tax return using commercial software or request the issue of a paper return and then post it to HMRC.
Scrapping Paper Returns: Going digital or else!
This push to file online is part of the government’s objective to get everyone to interact digitally with HMRC and all other government bodies. Over the next two years, HMRC has a target to reduce the higher-volume letters and forms it sends out on paper by persuading taxpayers to use its digital channels instead.
An example of this is the SMS messages trial, which HMRC launched earlier this year. HMRC is also pushing employers and businesses towards digital communication wherever possible. In February 2023 it was announced that all digitally capable employers will be required to submit P11D and P11D(b) forms online forms from April 2023. Similarly, P6 and P9 coding notices will soon be provided in digital form only.
Scrapping Paper Returns: Exemptions allowed
Bowing to pressure, in particular by Age Concern, HMRC has decided not to push older taxpayers into filing online. Those taxpayers who are aged over 70, who are not already filing their tax return online, and who don’t have an accountant, will continue to automatically receive a paper tax return form. Although HMRC’s spokesperson optimistically added: “Anyone over 70 can still sign up to file online by going to gov.uk and searching for ‘file your self-assessment tax return online.”
There are also a number of employers who are not digitally capable, for example, disabled persons who employ personal carers and assistants. These people will also be able to choose non-digital channels to communicate with HMRC.
Finally, on 15th March (Budget day) HMRC released a consultation inviting individuals and businesses to give their views on the digitalisation of income tax services. This consultation closes on 7th June 2023, so if you want to add your twopence worth, you have only a few weeks left.
Tax Accountant’s view
I’m getting fed up with HMRC’s seeming obsession to only communicate with a taxpayer digitally, together with increasingly petty obstacles to try to force taxpayers into doing what they want you to do. An example of which is withdrawal of the option to print-off a tax return from their website. So come on Mr Taxman, show some heart and for once consider the needs of the digital dinosaurs!