The introduction of the first Tax Administration and Maintenance Day (TAMD) in the U.K. happened on 30 November 2021. This followed Tax Day, which took place in March 2021. Both dates marked the release of many government consultations and calls for evidence, some of which could have significant impacts on the payroll profession.
What Does Global Payroll Need to Look For?
On Tax Day, the raising standards in the tax advice market consultation was the document that the Chartered Institute of Payroll Professionals (CIPP) felt could bring the biggest changes for global payroll professionals. This was because this document explored the potential of introducing mandatory professional indemnity insurance (PII) for anyone providing tax advice. It also sought to establish a definition of tax advice, and many debated whether the work carried out by payroll teams could fit into that category. Would payroll professionals be required to hold PII?
The CIPP submitted its response to the consultation in June 2021. This discussed the fine line—somewhat like a tightrope—between providing guidance and giving advice. Payroll professionals are far more likely to provide guidance than advice within their roles but are often asked, either by clients or employees, for information on topics outside of their expertise.
TAMD confirmed that mandatory PII would not be introduced for tax advisers, which the CIPP welcomed. The government has changed its approach and will be launching a further consultation in early 2022 to establish a definition of tax advice. Only after this has been agreed will alternative measures be explored to raise standards in the tax advice market. There seemed to be a consensus that PII would not act to raise standards and that other options, such as mandatory education, should be considered.
Her Majesty’s Revenue & Customs (HMRC) has a 10-year administration strategy with a goal to build a trusted and modern tax administration system for the U.K. As part of achieving this goal, a call for evidence—which examined the tax administration framework—was released on Tax Day. On TAMD, the government confirmed it will consider the responses when shaping how best to “develop, prioritise and sequence” any next steps. Additionally, HMRC will construct a roadmap for future consultation and analysis on this 10-year vision.
The activity did not stop there. The Office of Tax Simplification (OTS) published a scoping paper in June 2021, considering a change to the tax year end date, which currently sits at 5 April. There were proposals for it to be moved to either 31 March or 31 December. A conclusion was released in September 2021, which confirmed that a change to 31 December would be the most beneficial move as it would mean international alignment across many jurisdictions.
Despite this, due to the complexities surrounding the initial change to the tax year-end date, the OTS concluded it would not recommend a change at this time. It presented its findings to the government, which confirmed there was no imminent intention to change the tax year-end date. This means payroll professionals can breathe a sigh of relief.
TAMD also included many updates as to the progress of previous consultations and calls for evidence, but also introduced some entirely new developments. Addressing the negative press that some umbrella companies have received since the implementation of off-payroll working, a call for evidence on that topic has been released. Responses are requested which detail how umbrella companies interact with the tax and employment rights systems. This is a collaborative effort between HMRC, HM Treasury, and the Department for Business, Energy and Industrial Strategy (BEIS).
It is also recognised that there are organisations that do not pay the liabilities they owe to HMRC. Because of this, HMRC has launched a call for evidence which centres on how debt collection activities can be tailored to fit with contemporary working practices.
Tax Day and TAMD are both completely new concepts from the U.K. government and the CIPP wonders if they will be annual occurrences going forward. It is refreshing to see how committed the government is in creating a more digital and fit for purpose tax administration system and the level of engagement it is asking for from the public.
Payroll professionals are thankful that there were no substantial changes announced on TAMD, as they have the new health and social care levy to get to grips with and a busy tax year-end ahead.
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Lora Murphy, ACIPP, is the Content Editor at the CIPP.