HMRC must lead effort to simplify tax repayment for the vulnerable

HMRC must lead effort to simplify tax repayment for the vulnerable

The Low Incomes Tax Reform Group (LITRG) wants HMRC, supported by the tax profession and the Office for Tax Simplification (OTS), to lead the fight in protecting vulnerable taxpayers by helping them to make informed and carefully considered choices about tax repayment.

Poor service and complexity has resulted in many disadvantaged taxpayers turning to unaffiliated refund organisations rather than HMRC as their first port of call in dealing with tax repayment.

Some of these refund organisations can make it seem as though HMRC regulating them for money laundering purposes is some form of endorsement of their services, but it is not.

Such organisations can be exploitative, often drawing in taxpayers with over-inflated promises. Deciding with whom to entrust personal data is an extremely important decision for taxpayers, and so LITRG is calling for a focus on simplification and education so that taxpayers have the knowledge to make informed decisions themselves.

LITRG's Chairman, Anthony Thomas, said: "The perception of tax services being difficult for individuals to access unaided has almost certainly resulted in certain tax refund organisations exploiting this gap; that perception may be hard to reverse in the short term. Part of the solution lies in limiting the number of people overpaying tax in the first place; printed and online guidance that is as easy as possible to navigate will be an important step towards achieving that.

"The ability to make informed choice comes through education. HMRC should take the lead in this area, supported by others in the tax profession and with the voluntary sector through grant aid. Education should focus on the importance of P45 and new starter (formerly P46) forms, changes to PAYE under the new Real Time Information (RTI) system and being proactive by aiming to ensure that tax is a feature of the school curriculum. The incentives are clear - minimising costs and the risk of fraud.

"There are other areas which will go some way to easing and simplifying the repayment system. RTI, for example, means that in due course there will be a significant improvement to the capacity of HMRC to minimise overpayments of tax through PAYE. The HMRC digital strategy, provided there are safeguards to protect those who may be digitally excluded, will also lead to greater online access to taxpayers' records, for both individuals and agents."

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George Bailey