This HM Revenue & Customs' consultation lays out and seeks views on options for the policy and IT design for their Digitalising Business Rates (DBR) project.
ACCA welcomes the opportunity to respond to HMRC’s consultation on Digitalising Business Rates: connecting business rates and tax data.
Whilst ACCA acknowledges the Government’s earlier announcement to link tax data to business rates data (DBR), we are gravely concerned that these proposals will not deliver a net benefit to society as represented by business and the regulatory authorities. We believe that the cost of these proposals to both UK business and the 314 billing authorities in England would significantly exceed any savings to the public purse from a reduction in fraudulent or erroneous claims, although we acknowledge the concerns expressed by the Local Government Association around business rates avoidance.
At the heart of these proposals lies the fundamental question: what is the role of HMRC? HMRC has a long-established role as assessor and collector of taxation, payments and customs in the United Kingdom, together with administering certain benefits for the Department of Work and Pensions, but its primary role is not that of a data collection body. HMRC data is shared under specific instances of legislation with other Government bodies and certain public sector entities to facilitate their activities, but it is used to supplement, rather than replace or outrank, the data held by those bodies. Much of the data that HMRC proposes to obtain under the DBR scheme would be available to HMRC under the Making Tax Digital (MTD) reforms; for this reason we recommend that HMRC puts its DBR scheme on hold until it has comprehensively assessed the data to be made available under MTD.
We would emphasise to HMRC that businesses operate across the UK and note that the DBR proposals are specifically for England; we would ordinarily expect proposals of this nature to consider joint working across all countries and devolved administrations in the UK. Ultimately, we would have hoped that HMRC would seek to ease the regulatory burden on business and simplify the business rates process; the current proposals seem to have been designed for the government’s benefit rather than UK business.
We are particularly concerned that the proposals have neither been costed, nor do they outline key processes that would be critical to programme success, such as the ‘silent matching’ of ratepayer to taxpayer data. As noted in our letter to the Chancellor of the Exchequer earlier this month, HMRC is insufficiently resourced to fulfil its business-as-usual obligations at present; as it is currently resourced, we do not believe that HMRC can perform the functions of a tax collection agency, play a role in the benefits system, and act as a government data hub. We are also concerned that these proposals have been published and comments invited thereon prior to publishing the Non-Domestic Rating Bill, which will legislate the new duty on ratepayers to report certain information to the Valuation Office Agency (VOA).
ACCA recognises that it would be beneficial for the Government to ‘better target financial support to the businesses that need it most’1, and ‘improve the data available to billing authorities in determining the reliefs that individual ratepayers should benefit from’1, indeed we applaud these ambitions; however, the DBR proposals as outlined would create an onerous burden on both large businesses with multiple rateable properties, and small and medium enterprises (SMEs) with limited capacity to provide this data. The proposal to present business rates data alongside HMRC tax liabilities on a taxpayer dashboard has potential to drive further confusion for ratepayers and taxpayers, while potentially exposing commercially sensitive yet irrelevant tax information to their professional advisors and/or agents. For DBR to succeed, it will be essential from the outset to incorporate authorisation for multiple agents for a single ratepayer or taxpayer, and for the ratepayer/taxpayer to determine the level of systems access to be provided to those agents.
If HMRC intends to proceed with its DBR scheme, we recommend that HMRC sets out how such proposals align with its purpose to ‘collect the money that pays for the UK’s public services and help families and individuals with targeted financial support’2 and ‘help the honest majority to get their tax right and make it hard for the dishonest minority to cheat the system’2. We also recommend that HMRC embarks on a public education programme to spread awareness of the new requirements, if implemented, perhaps in consort with the VOA’s new duty on ratepayers to report certain information.
To read the response in full, please download the consultation response document on this page.