Closed consultation

Improving the data HMRC collects from its customers

Published 20 July 2022

Summary

Subject of this consultation

This consultation document proposes a number of potential options for improving the range of data HM Revenue and Customs (HMRC) collects, uses and responsibly and safely shares across government. We want to ensure that the data we hold gives us as accurate and up to date picture of citizens and businesses to help build a trusted, modern tax administration system and improve government policy making.

Scope of this consultation

The consultation identifies six areas where HMRC’s data could be improved, along with specific implementation options. These are:

• the business sector of the self-employed   
• the occupations of employees and the self-employed
• the location of an employment or a business
• the hours employees work 
• dividends paid to shareholders in owner managed businesses     
• the start and end dates of self-employment

For the purpose of this consultation, we refer to employees as those whose earnings are subject to Pay As You Earn (PAYE) and those who are self-employed as someone who has trading income.

This consultation seeks views on all these proposals before final decisions are made regarding which data to collect, from whom and from when.

Who should read this

The changes in this document will potentially affect all self-employed taxpayers, all employers, employees about whom additional data may be stored and shared, as well as tax agents and tax or payroll software providers for these groups.

We would be particularly interested in hearing from businesses with multiple branches, owner-managers of limited companies, and businesses who employ a significant number of staff through agencies or on irregular working patterns (as well as employment agencies themselves).

We would also be interested in hearing from stakeholders with a wider interest in government data use and data strategy.

Duration

This consultation will run from 20 July 2022 to 12 October 2022.

Lead official

The lead official is C. Connor of HM Revenue and Customs (HMRC).

How to respond or enquire about this consultation

Please contact responsivenessdataconsultation@hmrc.gov.uk stating the organisation you represent.

Additional ways to be involved

Please contact responsivenessdataconsultation@hmrc.gov.uk if you are interested in meeting with us to discuss this consultation.

After the consultation

We will consider all responses received by the deadline and plan to publish a response later in the year.

Getting to this stage

HMRC already collects a wide range of data from its customers and uses this successfully to drive improvements in tax administration and to target compliance interventions and customer support.

Ministerial foreword

The world is changing, and for government to be effective in the 21st century it needs to be joined up, innovative and efficient. Data, the driving force of the world’s modern economies, is central to making that happen.

Businesses, the public sector, and civil society across the UK already harness the power of data to achieve great things. But to keep pace with change, government must continue to adapt its approach to data. The government needs to consider what data it collects, including through the tax system, and how it smartly and securely uses and shares that data.

This was brought to life for me in my ministerial roles at the Ministry of Justice (MoJ). Linking data between the MoJ, the Department for Work and Pensions (DWP) and HMRC provided robust evidence to show that securing employment was key to reducing re-offending rates. One-year re-offending rates were lower for offenders who found a job in the twelve months after release. Reoffending costs the public purse around £18 billion per year. So this evidence helped make the case for improving employment outcomes for prisoners and enabled us to measure what employability interventions worked and how well.

In addition, the government’s economic response to the coronavirus (COVID-19) pandemic was only made possible through the powerful use of data to make big policy decisions and deliver our interventions. Despite the challenges we faced, the UK is emerging from that crisis with unemployment close to historic lows and remains a competitive and dynamic place to do business.

The pandemic brought into stark relief where we know too little about the citizens and businesses we serve. But looking ahead, the administrative data collected by HMRC and other departments is increasingly the best source available for key economic statistics. This data, when it is timely and linked to other information, can generate tremendously valuable insights and lead to better policy and operational decision-making across government. These are the sorts of benefits we should reap for the taxpayer and our public services.

A modern and forward-thinking data regime will ensure the UK remains a highly competitive and resilient place to work and do business. In the National Data Strategy, the government set out its ambition to harness the power of data to drive productivity, create jobs, improve public services and position the UK as a frontrunner of the next wave of innovation. How HMRC administers the tax system will be crucial in achieving this.

HMRC is already driving improvements through the Tax Administration Strategy, delivering greater resilience and ease of use for taxpayers and businesses in the tax administration system. Listening to stakeholders throughout this process is central to the department’s approach, helping HMRC maintain public trust in the use of their data.

This consultation plays an important role in delivering on these pledges by exploring how HMRC could collect additional data as part of the tax system, helping to make tax easier to get right and harder to get wrong, as well as better share data securely across government to improve policy making to provide better outcomes for citizens and businesses. We are committed to working with businesses and stakeholders to ensure that any additional burden is minimised, including options around how and when we collect any additional data.

We need a whole-government approach to meet the challenges of today and tomorrow. Smart use of data will allow us to do this. I welcome and look forward to hearing the views of businesses, civil society and other partners on what data HMRC should be collecting and how we should use it most effectively.

The Rt Hon Lucy Frazer QC MP
Financial Secretary to the Treasury

Executive summary

This consultation document proposes a number of potential options for improving the range of data HMRC collects, uses and responsibly and safely shares across government. The focus here is on data collected directly from taxpayers but in parallel HMRC continue to look critically at the data we already collect, and could potentially collect in the future, from third parties to support our objectives and improve customers’ experience.

We have selected several areas where we think that collecting additional data could bring significant benefits to customers and taxpayers. Some options target specific customer groups, such as the self-employed, while others look to collect a particular piece of information across different customer groups. The options we are consulting on here are those which were assessed as bringing the greatest benefits when balanced against any potential additional administrative burden for customers. This data is not currently collected elsewhere to the extent that would be required to realise the potential benefits for taxpayers and citizens. The potential benefits of each of the options are distinct and are set out in the relevant sub-chapters covering:

• the business sector of the self-employed   
• the occupations of employees and the self-employed
• the location(s) of an employment or a business
• the hours employees work 
• dividends paid to shareholders in owner-managed businesses     
• the start and end dates of self-employment  

We welcome responses from taxpayers, businesses, employers and all interested stakeholders on all options in the consultation relevant to you. We are particularly interested in views on the opportunities presented for improving tax administration and other services through use of the proposed data. We are also very interested in the practical application of the proposed options for collecting this data and how we can minimise any administrative burdens this may pose. Further, we would welcome views on where different data sets to those covered in this consultation could bring significant benefits to individuals and businesses and the delivery of public services across government.

Chapter 1 sets out the overview and context to the proposals to improve the data HMRC collects from its customers, including how more effective collection and use of data can help deliver better services and support for both HMRC customers and citizens more broadly.

Chapter 2 takes each proposal in turn and sets out why better data is needed, the current position and proposals for improvements and poses some specific questions for respondents.

Chapter 3 sets out the obligations, safeguards and legislation in place to ensure HMRC exercises its powers in a proportionate way to maintain public trust, keeps personal data safe and maintains the strictest protections on how data is held and used. It also includes the obligations that would be placed on customers should the proposals be taken forward.

Chapter 1: Overview and context

Introduction

Improving how HMRC collects, uses and shares data continues to be a high priority for the department. This is a key element in building a trusted modern tax administration system fit for the challenges and opportunities of the 21st century, as set out in the government’s 10-year Tax Administration Strategy.

Better use of data in a modern tax administration system can bring direct benefits for customers and for taxpayers as well as to HMRC and government. Better understanding of customers’ circumstances helps us to administer each customer’s tax affairs better – including getting our outbound contact with them right, not troubling them with unnecessary enquiries and being better able to understand their circumstances if they contact us. Better data about the whole customer population can help us target operational activity more effectively – for example compliance and debt collection activity. This means individual customers are more likely to get the intervention suited to their circumstances, and we can drive greater efficiency and effectiveness in HMRC’s operations, ultimately delivering better value for all taxpayers.

HMRC is also supporting the National Data Strategy. The strategy aims for government to securely use data to drive innovation and productivity across the UK, enhancing the delivery of public services to improve people’s lives, as well as boosting our ability to measure the impact of policies and programmes. For example, the government’s ambitions on levelling up can be supported by collecting and using more robust data that has location at its heart. Although HMRC already plays an important role in data sharing across government, it has the potential to do more in support of regional transformation by improving the geographic data it collects, uses and shares.

As one of the largest data controllers in the UK, HMRC handles billions of records every year and has well-established systems and controls for safe and secure collection and the onward sharing of personal data in accordance with UK data protection legislation. As such it is ideally placed to help improve government access to robust data and find ways to responsibly and safely share more data across government.

The proposals set out in this consultation address current data weaknesses in a number of areas where we think that collecting additional data could bring significant benefits to customers and taxpayers. Whilst we recognise that these proposals may add administrative burdens up front, collecting data at the right time can minimise costs for individuals and businesses alike, supporting a more tailored customer experience across a range of HMRC services. Indeed, not having access to the right data can lead to increased costs, for the tax system in additional compliance activity, and more broadly where policy and public service delivery is insufficiently targeted. HMRC is exploring approaches and tools to make providing additional data as simple and straightforward as possible. This includes combining automation with easy to complete free text boxes, for instance potentially generating accurate Standard Occupational Classification (SOC) codes behind the scenes.

HMRC continues to engage across and outside government to identify data gaps beyond those set out here. In all cases, the costs and benefits will be weighed up through close collaboration with stakeholders. This means taking a pragmatic and iterative approach to changes to how we collect and use data to deliver the best results for the least burden on customers, making sure we retain the support of customers and taxpayers. We will take a collaborative and consultative approach to delivery of subsequent opportunities for improvement.

Wider context and related data initiatives

This consultation needs to be considered alongside a range of related initiatives that are driving forward improvements in HMRC’s data collection, usage and exchange. Some of these are touched on briefly below.

Making Tax Digital

Making Tax Digital is making fundamental changes to the way the tax system works – transforming tax administration so that it is more effective, more efficient and easier for taxpayers to get their tax right. From April 2024, 4.2m taxpayers will keep digital records and use third party software to submit their income tax Self Assessment returns, combined with investment in IT infrastructure this will help improve how HMRC uses this data for tax administration.

Tax Admin Framework review

Review and reform of information powers within the Tax Admin Framework will enable HMRC to make better use of the data we collect to improve the taxpayer experience. HMRC published a call for evidence in March 2021 seeking views on how the tax administration framework could be reformed, including opportunities for better use of new and improved sources of data, and data sharing within government. The responses to this consultation will support and inform a broader review of information powers.

Third party data

HMRC is reviewing the third party data which could be used to create a more flexible, simpler regime for data collection and to reduce customer errors, for example, through pre-population of returns and simplifying reporting obligations for taxpayers. This also includes considering how to integrate the Office for Tax Simplification (OTS) published recommendations in July 2021 on how HMRC can make better use of tax-related data from third parties.

Cross-government data sharing

HMRC already shares a substantial amount of information to support better public service delivery and target government support in a number of areas. HMRC has c.250 legal gateways for data sharing in this way, and each gateway states the purpose(s) that HMRC can share data with the other department and associated conditions. This includes:

• support for the Office for National Statistics’ (ONS) Integrated Data Service (IDS)
• sharing individual taxpayer data with DWP to correct Universal Credit payments made during the pandemic
• support for the ‘Get Your State Pension’ service, and to improve the quality of DWP’s Family Resources Survey
• sharing annual earnings data with the Department for Education (DfE) for student loans forecasting and for the Longitudinal Education Outcomes (LEO) programme
• sharing data with the Scottish government to support eligibility verification and payment of devolved benefits

The government is also currently consulting on how to deliver its ambition to digitalise business rates in England. This would connect business rates data held by Local Authorities (LAs) with tax data held by HMRC, and in turn allow HMRC to share data with LAs to ensure that the right businesses are benefitting from business rates reliefs.

International data

Additionally, HMRC exchanges large amounts of data automatically with other jurisdictions that is valuable for detecting non-compliance but is also increasingly useful to support taxpayers and prevent errors. Financial account data is exchanged under the Common Reporting Standard (CRS), with the volume and range of information exchanged set to increase through new exchange agreements that the UK is committed to, or may introduce:

• Model Reporting Rules for Digital Platforms: data on between 2 to 5 million UK taxpayers who sell goods or services on digital platforms
• OECD Two-Pillar Solution to address the tax challenges arising from the digitisation of the economy, ensuring that Multinational Enterprises (MNEs) will be subject to a minimum tax rate of 15% and will re-allocate profit of the largest and most profitable MNEs to countries worldwide

The outputs of this consultation will be developed in line with all of these related data initiatives to ensure that we are gathering and sharing data efficiently and effectively across HMRC, building on existing transformations programmes.

Chapter 2: Data improvement options

The following chapter covers several areas where analysis has highlighted that collecting additional data from customers could bring significant benefits. Some options are targeted to specific customer groups such as the self-employed, while others look to collect a particular piece of information across different customer groups. The options we are consulting on here are those which were assessed as bringing the greatest benefits when balanced against any additional administrative burden for customers.

Sectoral data

Overarching question: across all of the options, we would like to understand which would be the most useful and would offer the most benefit for businesses and taxpayers. Do you think the options for collecting additional data we have prioritised here are the right ones, and are there any other areas where collecting more, better or different data would support tax administration and/or broader public service delivery?

Why better data is needed

A key piece of information about any business is what that business actually does. From agricultural holding companies (SIC code: 64201) to zoological gardens (SIC code: 91040), this classification of the main area of economic activity for a business tells us about its place in the economy and its prospects for the future. These are common classifications for a business, and it is therefore not surprising that customers tend to assume and expect that HMRC already holds this information about them. More on SIC codes at the end of this section.

HMRC’s sectoral data derives from a range of partial sources, most of which are voluntary, which means the data is all too often inaccurate, incomplete, or not up to date. Until now, collecting sectoral data has not been a priority for HMRC, because it does not directly affect customers’ tax liability. As a starting point we are looking to improve government’s access to sectoral data for the self-employed.

The COVID-19 pandemic has shown the importance of sectoral data. Different sectors were subject to different restrictions and have recovered from the pandemic at different rates. Better sectoral data would improve tax administration, for example by helping HMRC to develop a better understanding of the barriers specific sectors face in dealing with us. It would also allow HMRC to raise awareness of and target reliefs effectively, for example through nudging or – in the longer-term – potentially helping customers by pre-populating some fields.

It would also increase HMRC’s ability to target compliance interventions at higher risk sectors. This would help the vast majority of businesses who try to get their tax right, by nudging those who are accidentally non-compliant and helping to avoid unnecessary investigations. Finally, it would provide an evidence base to support future sector-specific policy interventions, both in HMRC and across government, for example economic support in relation to a future crisis.

The status quo

HMRC currently receives sectoral data on customers from a range of taxes, both directly, through tax registrations, and from Companies House. The type and quality of this data varies significantly:

• timeliness: VAT and PAYE data is only received when a business registers; corporate, self-employed and partnerships data is received annually
• level of requirement: in some cases, this data is compulsory, in other cases it is voluntary, notably the nature of business field in Income Tax Self Assessment (ITSA)
• Standard Industrial Classification (SIC) vs free text: Companies House requires companies to use SIC codes, while HMRC tends to use free text descriptions

HMRC wants to reduce administrative burdens that data collection places on its customers. We are therefore interested in knowing the extent to which the data provided through different routes is, in practice, duplicative.

VAT and PAYE

Businesses are required to tell us the ‘nature of business’ when they register. However, because businesses only have to register once, HMRC does not have a lever to effectively ensure that this is updated. Furthermore, because HMRC use free text, it is difficult to analyse the data or combine it consistently with other datasets, so it is not easily comparable with SIC codes for example.

Corporates (and limited partnerships/limited liability partnerships)

When a company is registered with Companies House, it must provide information on its business sector. However, businesses are prompted to confirm that this information is still accurate when they file their annual confirmation statement. Companies House requires companies to use SIC codes, allowing them to select up to four.

Income Tax Self Assessment (self-employed and partnerships)

For the purpose of this consultation, we refer to the self-employed as someone who has trading income. The supplementary self-employment and partnership forms in ITSA include a field on ‘description of business’ (self-employed) or ‘description of partnership trade or profession’ (partnerships). This data is provided every year alongside the annual return and Making Tax Digital for ITSA customers will be able to supply this through their software. However, as this field is not compulsory and relies on free text the data is low quality and not comparable with SIC-based data.

Sector-specific taxes

There are also some taxes that only apply to certain industries (e.g. Air Passenger Duty), some reliefs that apply to specific industries (e.g. Gift Aid), and some taxes where HMRC take a more proactive approach to supply-chain integrity (e.g. Tobacco excise). In each of these cases HMRC holds more information on which sector a business is in. However, these only cover a small proportion of the overall economy.

Proposals for improvement

As above, sectoral data is collected through a wide variety of taxes. It is not feasible to improve them all at once, either in terms of HMRC resources or the impact on customers. We have identified self-employed sectoral data as having the biggest potential for improvement. As it is currently voluntary and free text it can be low quality, with a simple change to a compulsory field with a standardised format offering significant improvements. Furthermore, because it is collected on an annual basis, unlike VAT and PAYE that are collected only when a business registers, it is more up to date and therefore has the potential to be a very strong data set. Improving our data will be an iterative programme and we will consider options for collecting similar data for other customer groups in due course.

The data from partners’ Self Assessment returns also has these issues, however many partnerships are also required to register with Companies House and therefore already provide sectoral data to them. Furthermore, the self-employed population is much larger than the population in partnerships; and as partnerships tend to be larger and have employees, depending on how they operate, they are more likely than the self-employed to be registered for VAT and PAYE.

HMRC is therefore proposing two options. These are not mutually exclusive: either one could be brought forward, or both.

• Income Tax Self Assessment for the Self-Employed: making the business description field compulsory

At present, the field is voluntary. Many customers do not therefore complete the field; many do not even have the choice, as because the field is voluntary many providers do not include it in their software. The result is that the data held by HMRC is not comprehensive, and therefore has limited analytical value.

The proposed solution is to legislate to make the business description field compulsory.

• Income Tax Self Assessment for the Self-Employed: changing the nature of business field to SIC.

SIC codes would be preferable to the current free text data, as their standardisation makes them easier to categorise for analysis purposes, as well as allowing them to be joined with other datasets across government. Our current assumption is that we would use the condensed 5-digit SIC used by Companies House, to ensure compatibility with the information we already hold on corporations and limited liability partnerships/limited partnerships, and that we would allow businesses to select up to four options.

HMRC is currently exploring the feasibility of a range of methods to produce standard industry classifications from this data, recognising that the current UK SIC is in the process of revision. This includes exploring options for allowing customers to continue inputting this field in free text, with HMRC converting it into SIC codes. For all options we need to consider the costs to both customers and HMRC. We are aware that many businesses find SIC codes difficult to use and are interested in views from businesses and agents as to the challenges and difficulties.

Question 1: Within this option, should HMRC prioritise improving self-employed data as set above, or another customer segment (for example, employers, companies, partnerships, businesses registered for VAT)?

Question 2: Are there any areas of the tax system where HMRC’s collection of sectoral data could be streamlined or where we could collect this information in a different way? In particular, does your business provide sectoral data to HMRC (or other parts of government) in more than one place (for example, to HMRC through both VAT and Self Assessment; or to HMRC and to Companies House)?

Question 3 – for taxpayers and their agents: How easy or difficult are SIC codes to use for your business? What would make it easier for your business to find and input your SIC code(s)? What level of SIC would be most appropriate (i.e. three or four digits)? Do you prefer using the full version from the Office for National Statistics, or the condensed version used by Companies House?

Question 4 – for software providers: How easy or difficult would it be for you to incorporate SIC codes into your software, in a way that is easy for your customers to use?

SIC codes

The Standard Industrial Classification (SIC) is an international system for classifying industrial activity into sectors. The UK version (UK SIC, referred to in this document simply as ‘SIC’), is maintained by the Office for National Statistics, and is designed to be compatible with the versions used by the UN.

SIC uses numerical codes classified into a hierarchical order, so that the first digit is the most generic sector description (e.g., ‘mining and agriculture’, ‘manufacturing’), and each additional code adds granularity, up to a total of 4 digits (with some codes being split through an additional 5th digit). Companies House uses its own condensed version of the ONS’s 5-digit SIC.

The ONS’s Standard Occupational Classification (SOC) works on the same basic principle as SIC, but for classifying occupations rather than sectors. It is designed to be compatible with the international version maintained by the International Labour Organization.

The current SIC is being revised at an international level and a new version is expected to be endorsed at the UN in March 2023.

Occupation Data

Overarching question: across all of the options, we would like to understand which would be the most useful and would offer the most benefit for businesses and taxpayers. Do you think the options for collecting additional data we have prioritised here are the right ones, and are there any other areas where collecting more, better or different data would support tax administration and/or broader public service delivery?

Why better data is needed

The Spring Statement Tax Plan sets out the government’s ambition to strengthen the UK’s economy over the remainder of the current Parliament. The part of the plan focused on creating the conditions for private sector-led growth sets out how government will encourage businesses to offer more high-quality employee training and explore whether the current tax system – including the operation of the Apprenticeship Levy – is doing enough to incentivise businesses to invest in the right kinds of training.

Occupation data is a critical tool for understanding the role of skills and human capital in economic growth and prosperity, and to support the decisions that individuals, employers and government make about learning and skills. The power of occupation data increases when it is combined with other data sets the government already holds or can access, for example on salaries, job vacancies or educational outcomes. Occupation data also has a major role in the nation’s social statistics and a comprehensive source is critical for more timely and regular delivery of the detailed statistics currently provided by the population census every 10 years.

Collecting occupation data alongside tax records would support the government in delivering the skills needed by employers, the economy and society. It would help identify the skills needed to support growth industries and local areas with a changing industrial profile, and to identify occupation-specific skills shortages in different areas of the country. It would also help with better design and evaluation of policy interventions for skills as well as a range of other areas, from reducing occupational-related health disparities to determining which occupations are the best bet for helping get ex-offenders into work.

Improved occupation data can also help businesses and employers. It would help employers understand more about what skills and training they need employees to have. It could also help businesses with investment decisions, by using information on which areas of the country have concentrations of people with particular skills and experience they are looking for.

Additionally, for individuals, it could help them decide what qualifications they take, based on an understanding of which courses tend to lead to which jobs, whilst also supporting government and skills providers in ensuring that the right courses and training are available; and help individuals decide the extent to which their current skills are scarce or valuable.

The status quo

At present HMRC does not collect any data on occupation. The data HMRC already collects on Business Sector (see previous chapter) does not allow us to determine individuals’ occupations and therefore the skills they are using in their roles. More generally, to understand the need, for example, for programmers and software development professionals we would need to look beyond businesses where the primary activity is software development and take account of anyone working in these occupations within businesses in other industries, such as financial and insurance services, manufacturing, etc. Overall, data specifically on occupation is critical to understanding the market in labour and the effect of skills on that market, as well as the wider economy and society. For the purpose of this consultation, we refer to employees as those whose earnings are subject to PAYE, and those who are self-employed as someone who has trading income.

HMRC, and other government departments, currently rely on occupation data from other sources for policy analysis purposes. Most importantly, the ONS’s Annual Survey of Hours and Earnings (ASHE) and the census asks for job title information and a brief description. However, ASHE only takes a 1% sample, which is not granular enough for the location-specific or firm-specific data uses described above. The ASHE sample is also taken from PAYE data, and therefore excludes the self-employed. The census can only provide a snapshot every ten years, but given the rate of change in society and the economy, there is a need for more frequent data. The availability of other sources of data would support ONS’s ambition to deliver timely and frequent statistics to users across government and beyond, whilst reducing the reliance on a decennial census.

Proposals for improvement

In order to achieve more comprehensive coverage, the government needs information both on the occupations of employees and the occupations or trades of the self-employed.

Employees

The proposal is to add a field to Real Time Information (RTI), the reporting mechanism for PAYE, requesting the occupation of each employee. This would be divided into two stages:

• Phase 1 would be the initial collection of this data from the employed population to create a ‘baseline’ (i.e. a picture of the occupation of employees as a particular point in time), to ease the administrative burden on employers and intermediaries we may undertake phase 1 in tranches

• Phase 2 would be the ongoing updating of records as employees join organisations, leave, or change occupation. Our proposal is that employers would only be required to provide occupation information to HMRC when one of these events happens, although they could, if it is easier, send this information with every return

Our preferred option is that this would be compulsory, to ensure that the data is comprehensive. This means that the data can be used without discriminating against those who chose not to provide data; it also means that analysis based on this data is more reliable and can be more granular.

It would also be based on SOC codes (see below), to ensure that the data is consistent and therefore comparable (for example, allowing comparison between years and comparison and matching with other datasets). For some employers arrangements will need to be made to reflect their structure and the complexity of the labour market. For example, umbrella companies may need to proactively collect this data from the employees they provide a service to.

As with sectoral data and SIC codes (see above), HMRC is exploring options to ensure data entry is simple and straightforward, such as requesting job titles and then automating the coding of these titles against existing SOC codes.

For example, the census uses three free text questions to derive SOC:

• what is, or was, your full job title?
• briefly describe what you do, or did in your main job?
• what is, or was, the main activity of your organisation, business or freelance work?

An automatic matching tool is then used to assign the SOC code. Again, we would need to consider the costs to both customers and HMRC of a chosen option.

Self-employed

The government’s proposal is to add a field to the self-employed supplementary Income Tax Self Assessment forms (and the equivalent in Making Tax Digital for Self Assessment) asking for ‘occupation or trade’, or similar wording. As for the employed population, our preferred option is to use SOC codes, with or without a free-text front end, and to make the field compulsory. This may be in addition to, or instead of, improvements to sectoral data proposed above. We will take a view of the relative merits of these two data sets based on the responses to this consultation.

Question 5: Would you find this information useful, if published in an anonymised form by the government (potentially linked with other datasets, such as salary, qualification or location information)?

Question 6 – for employers/payroll providers: How easy or difficult would you find it to categorise each of your employees by occupation? If you have used SOC codes previously, how easy or difficult to use, and what, if any, challenges do you find with them? Do you have any suggestions as to how we could modify or design this option in a way that minimises cost burdens?

Question 7 – for the self-employed/their agents: How well do SOC codes describe your, or your clients’, occupation?

Question 8: How easy would it be to extract job titles from existing payroll systems into RTI?

SOC Codes

The ONS’s Standard Occupational Classification (SOC) works on the same basic principle as SIC does for sector.

A SOC code contains up to 4 digits, with occupations classified into a nested hierarchy, with the first digit being the broadest category and the final digit the finest. It is designed to be compatible with the international version maintained by the International Labour Organization. SOC codes are broken down into 26 sub-major groups, 104 minor groups and 412 unit groups.

SOC v SIC Codes

While many self-employed people would naturally describe their sector and occupation, or trade, in the same way (e.g. a hairdresser), for others additional information is needed to provide insight (e.g. ‘construction’ or ‘building services’ could involve a number of occupational activities).

For the employed population, even taking into account salary information, knowing the sector a person is employed in provides little insight into what they personally do. The Standard Occupational Classification describes what an individual does, whereas the Standard Industrial Classification describes what the business does overall, and these may be fundamentally different.

For example, someone working in a healthcare business (e.g. classified in SIC as a general medical practice, hospital, specialist medical practice) may be operating in any number of occupation roles as defined in the SOC, especially in larger institutions e.g. doctor, radiographer, nurse, hospital technician, accountant, human resources professional. Likewise, SIC (mostly) classifies construction by what is being constructed (domestic buildings, commercial buildings, infrastructure), whereas SOC divides by trade and there will be a number of people working in other roles, ranging from unskilled to professionally qualified.

Location Data

Overarching question: Across all of the options, we would like to understand which would be the most useful and would offer the most benefit for businesses and taxpayers. Do you think the options for collecting additional data we have prioritised here are the right ones, and are there any other areas where collecting more, better or different data would support tax administration and/or broader public service delivery?

Why better data is needed

One of the government’s key priorities is to spread opportunity and economic activity more fairly across the country as part of its levelling up agenda. In line with this, the government would like HMRC to collect better location data so that it can have a detailed and reliable understanding of where economic activity is based.

Better location data would help HMRC and HM Treasury to design tax policy in a way that supports levelling up and enable greater policy flexibility. The government has introduced a Freeports model which includes a comprehensive package of measures centred on one or more air, rail or seaport and its surrounds. Granular location data will be valuable to the implementation and evaluation of Freeports, and assist in the development of policies of a similar nature in the future. It may also help other government departments target policies or interventions to business or individuals in a particular area.

Many crises requiring economic support have a localised nature, either directly (such as flooding) or indirectly (such as a recession hitting industries that are concentrated in particular areas). At points during the pandemic, restrictions placed limitations on businesses and individuals based in specific locations.

Better location data would also help HMRC identify particular compliance risks, especially with multi-location businesses, for example those with offshore activities.

Finally, data and location would help the Devolved Administrations and Local Authorities with their functions, by allowing the UK government to share more granular data with them.

The status quo

The data HMRC holds on location is inadequate to the tasks above. HMRC normally has physical address information on its customers, as well as non-physical address information such as email or telephone numbers. However, this is normally (for example for the self-employed) only a registered or correspondence address, which does not always correspond to the address where real economic activity is taking place. An exception here is VAT, where we ask for the ‘main place of business’, although businesses do not normally update this as it is only requested at registration.

This is especially problematic where businesses operate from multiple addresses, as HMRC will normally only have one recorded. To some extent, HMRC can cross-reference the data we hold with other information, such as land registry records and information from business rates. However, this information does not provide full coverage, and does not tell us the amount of economic activity that takes place at each location.

As with sectoral data, HMRC wants to reduce the administrative burden that the collection of data imposes on our customers and therefore we would be interested in knowing the extent to which taxpayers provide detailed location information already in multiple places, and if respondents believe any of these could be eliminated.

The government is also currently consulting on how to deliver its ambition to digitalise business rates in England. This would connect business rates data held by LAs with tax data held by HMRC, and in turn allow HMRC to share data with LAs to ensure that the right businesses are benefitting from business rates reliefs. It may be that plans to digitise business rates go a long way to resolving a number of the current issues with location data in England as described above. HMRC will ensure alignment across this work to ensure delivery of an effective and efficient approach to collecting the required data across all of the UK.

Proposal for improvement

As set out above, the main gaps in HMRC’s business location data are an understanding of businesses with multiple locations, and an understanding of where real economic activity is taking place. Any proposed solutions should address these. These two aims are linked, in that in order to have a nuanced understanding of where economic activity is taking place HMRC would need the data to cover all of a business’s locations and show the split in activity between them. On the other hand, a location has to have a minimum amount of economic activity to count as a real business location. For the purpose of this consultation, we refer to employees as those whose earnings are subject to PAYE, and those who are self-employed as someone who has trading income.

Our preferred option is to ask employers, through RTI, to give HMRC the office location or normal work base of their employees. Employers are required to have this information to allow them to correctly operate Income Tax expenses rules. We believe that a list of where each employee is based would provide a good proxy for locations with real economic activity; and that the number of employees at each location would provide a reasonable proxy for the split of activity between a business’s locations. This data would provide additional richness if it was combined with salary data and/or occupation data (if the government proceeds with collecting this). For example, both of these could indicate the split in locations between front and back-office staff, or where staff in senior management roles are based.

RTI already requires employers to give the residential address of each employee, and the proposal is for this new requirement to be operationalised in the same way, with 6 fields: 2 compulsory address lines, 2 ‘if applicable’ address lines, a UK postcode field and a foreign country marker (for those occasions where the worker has no normal UK office address).

There would potentially be a new field to indicate where the worker has no standard work address, such as for agency workers (see below), or to accommodate employees with multiple work addresses.

We are aware of two main downsides to implementing this proposal through RTI:

• this would not cover businesses without employees (including many of the self-employed): any proportionate approach to improving location data would involve working within existing taxes, and there is no tax that covers every single customer
• not all employees have a standard work address: for example, many people work primarily at a client’s address, which changes with varying degrees of frequency, such as agency workers, contractors, or itinerant workers such as plumbers or electricians (where these are not self-employed). However, in many cases these employees will either have a base which is their normal employment address, or a client with which they have spent a majority of the period that the RTI return covers

Alternatively, we could require additional location data to be reported through another taxes, such as through Income Tax Self Assessment, Corporation Tax or VAT. It would not provide as good a proxy of how much economic activity was taking place at each location: this would instead require businesses to split out sales or profits by location, or to only report on locations with activity above a given threshold. We believe these calculations would be disproportionately burdensome for businesses and we have therefore decided not to pursue these options further.

As noted above, we have already considered ways to improve location data from the self-employed and may return to this in future. However, we already have address information on the self-employed, which in most cases should correspond to where their business is based.

Example of how better location data would be used

Kitty owns ‘ASIT Building Supplies Ltd’, a chain of builders’ merchants in Lancashire. She has two branches: a newer, large branch with 5 employees, in Preston, in rented premises; and an older, smaller branch with 2 employees, on the outskirts of Blackburn, in property she owns. She also owns a small piece of scrap land near the Blackburn branch where the business’s truck is stored overnight. When ASIT was first incorporated, it was registered to the original branch in Blackburn, and although the newer branch is now larger, Kitty sees no need to change it. Kitty is no longer involved in the day-to-day running of the business.

HMRC would currently know the registered address, in Blackburn; we would also likely know the agent’s address. However, unless HMRC made a manual search (for example, through Google), which would only be worthwhile if we already had an interest in Kitty’s business (for example, if we had reason to suspect tax evasion), then we would not know that the Preston branch existed. This would mean that HMRC had an unrealistic picture of Kitty’s operations, which could impact on compliance as well as wider economic analysis. It would also make it more difficult to target localised economic support.

HMRC could check the Land Registry for England and Wales. However, in most circumstances this would leave out the rented property in Preston and wrongly include the scrap land in Blackburn. The spare land would also likely show up in a check of rateable properties, since it has rental value and is used for a purpose.

Under these proposals, ASIT would tell HMRC the main location of each employee, through RTI. HMRC would then know that Kitty’s business has a main branch in Preston (5 employees) and a secondary branch in Blackburn (2 employees). The scrap land, which is of marginal importance to the business, would not show up.

This analysis would be strengthened by comparison of the salaries paid across each branch. It could also be further enriched through use of occupation data: for example, in the above example, it was assumed that Kitty was no longer involved in the day-to-day running of her business. But if we assume instead that she was involved, then the approach above would give a misleading view. A simple list of employee numbers by location would lead us to think that the business was really run from wherever had the most employees. Whereas, in reality, it would effectively be run from wherever she is based. However, if like most owner-managers of limited companies, she paid herself a salary as well as taking dividends, then the inclusion of ‘director’ or ‘managing director’ or similar on the RTI return for her employment would give HMRC more accurate information.

Question 9: Within location data, is HMRC correct to prioritise improving data on businesses with multiple locations, and on the location of real economic activity?

Question 10: Are there any areas of the tax system where HMRC’s collection of location data could be streamlined or where we could collect this information in a different way? In particular, does your business provide detailed location data (e.g. covering multiple branches of your business) to HMRC (or other parts of government) in more than one place? Which avenue do you find the least burdensome?

Question 11: How easy or difficult would it be for your business [or, for agents, your customers] to provide work location information for each employee through RTI?

Question 12: [for payroll providers] How easy or difficult would it be for you to modify your software/your service to allow for the provision of work location information for each employee?

Employee hours worked

Overarching question: Across all of the options, we would like to understand which would be the most useful and would offer the most benefit for businesses and taxpayers. Do you think the options for collecting additional data we have prioritised here are the right ones, and are there any other areas where collecting more, better or different data would support tax administration and/or broader public service delivery?

Why better data is needed

The labour market continues to undergo fundamental change, and it is important that government has access to data that can allow it to understand and react to these changes. Having a more detailed understanding of the hours that employees work would help with the analysis of labour market trends across government. It would help improve government interventions in the labour market through increasing our understanding of both voluntary part-time work and underemployment. While the structures used to remunerate work continue to diversify, holding information about the employed population (those whose earnings are subject to PAYE) provides the richest data given it covers the largest proportion of the population.

In addition, the National Living Wage (NLW) and National Minimum Wage (NMW) are among the most important employment rights, and HMRC is currently responsible for enforcing them (though the Department for Businesses, Energy and Industrial Strategy has proposed consolidating NLW/NMW enforcement as part of a Single Enforcement Body for the labour market). HMRC already has information on the amount paid through RTI but does not currently have sufficient detail on employee hours to calculate an hourly rate. For the purpose of this consultation, we refer to employees as those whose earnings are subject to PAYE.

The situation at present

HMRC does not currently hold detailed information on hours worked by employees. Employers are required to give HMRC information on hours worked through the RTI return, but at best this is in the form of a band. Employers select between the following bands:

• band A: up to 15.99 hrs
• band B: 16-23.99 hrs
• band C: 24-29.99 hrs
• band D: 30 hrs or more

These bands were designed to assist with eligibility decisions for Working Tax Credits which, depending on circumstances, require working at least 16, 24 or 30 hours. They work well for the purpose for which they were designed. However, they are not sufficient to give information on minimum wage underpayment, except in cases of egregious underpayment (where the employer would be likely to falsify the return anyway), nor do they provide the detailed information to support well-evidenced future policy interventions.

For a significant and increasing proportion of the working population, even this information is not available. For workers on zero hours contracts, or anyone else without regular working patterns, employers can select a fifth band, e), for ‘other’. This means that HMRC has no information on their hours worked. Since this section of the population is more likely to be exploited, this is particularly concerning. Indeed, HMRC does not even know that these workers are on irregular working patterns, since band e) also covers things like payments for pensions or annuities.

Employers already hold this information, and indeed are required to show the hours worked by employees on their payslips, however this information is not currently shared with HMRC.

Proposals for improvement

Asking employers to send HMRC their employees’ payslips would be disproportionate – instead there already exists a mechanism for sharing this type of information on employees within RTI.

HMRC have identified two sub-options, and could take forward one or both:

• replacing categories a) to d) with a numerical input of hours worked
• splitting out band e) (‘other’), to detail the reason for the irregularity

We recognise that both options will require publishing clear definitions for hours worked for employers to use, building on existing definitions used for NMW. However, our current preference is to request information on contractual hours worked where those contractual hours are reasonably stable/information (i.e. not a zero hours contract). This is because we believe that collecting information on actual hours worked, in roles where employees are not paid by the hour, would be too burdensome for employers.

Question 13: How easy or difficult would it be to provide information on specific hours worked and/or actual hours worked?

Question 14: How predictable are the hours of your employees? How often do you use category e) hours worked (‘no regular pattern’), and what for? For example, pension payments or irregular working patterns (and if so what type of irregular pattern)?

Dividends paid to shareholders in owner-managed businesses    

Overarching question: Across all of the options, we would like to understand which would be the most useful and would offer the most benefit for businesses and taxpayers. Do you think the options for collecting additional data we have prioritised here are the right ones, and are there any other areas where collecting more, better or different data would support tax administration and/or broader public service delivery?

Why better data is needed

Many individuals who carry on their personal business through a company (Company Owner-Managers – COMs) remunerate themselves mainly by way of dividends rather than through payments of salary. Under current reporting mechanisms, it is not possible for HMRC to distinguish between the origin of dividends received. This is the case whether they are derived from an individual’s own company or as dividends from other sources. This was highlighted during the pandemic when this gap in data posed challenges for government in assessing whether it could target specific support intended to replace the income of COMs.

Currently HMRC is unable to identify who is a COM based on the data collected through tax returns, and for which companies they hold such a role. This data gap reduces the government’s ability to understand this population and target policy appropriately, including appropriate reliefs and the monitoring of tax-motivated incorporation.

HMRC propose to require COMs to declare separately from other UK dividends received the amount they receive from their own companies. This will give HMRC a better view of the total package of remuneration received by the COM from their own company. This will provide greater policy flexibility in general, better insights into the COM population and help focus compliance activities on those individuals who engage in tax avoidance.

The situation at present

Company directors can already tell HMRC that they are a director of a close company by completing the existing boxes on the employment page of the Self Assessment Tax Return (Page SA102). Completion of these boxes is currently voluntary and as such HMRC may not have consistent data to tell us the extent of the COM population.

All taxpayers who complete a Self Assessment Tax Return are obliged to declare all dividends received from UK companies on the main Self Assessment form (SA100). As the box for total UK dividends received does not differentiate between dividends directors receive from their own owner-managed companies and other dividends from UK companies, we cannot currently identify how much of their total dividend income arose from their own close company. There is not sufficient information available through other reporting mechanisms, such as annual accounts for UK companies, that would allow us to link them dividend information reported to HMRC.

Proposals for improvement

It is difficult to define a COM. To avoid confusion and to achieve consistency for our customers and between our own internal datasets, we are therefore proposing to build on the existing definition of a close company, in three ways.

First, the company director and close company fields that already exist on the SA102 form would be made mandatory.

Second, a new mandatory field would be added to the SA102 form that would ask for the value of dividends received from the close company of which the individual is a director.

Finally, there would be a further new mandatory field on SA102 asking for the percentage shareholding in the company.

We recognise that COM ownership structures can be complex and that many will have an element of split ownership involving connected parties. Therefore, this is only a small step towards getting a better understanding of how COMs are operated in practice. We are also considering alternative options to improve our understanding of this picture, including asking COMs to identify the close company they own/part-own. Better data on matching COMs to their companies would allow HMRC to understand the level of corporate profits from which a COM can draw. We will also consider how we can make better use of existing public record data to gain a better understanding of COM’s arrangements.

Close companies

Roughly speaking, a close company is a company that is owned or under the control of 5 or fewer participators (‘participators’ here including corporate entities), or where the directors of the company are also the owners.   A technical definition and detailed guidance can be found in the HMRC Company Tax Manual.

Question 15: Do you agree that building on the pre-existing definition of a close company is the best approach? Are there any other approaches you would prefer?

Question 16: How great would the administrative burden be for you or your customers in splitting out dividend income from controlled companies and/or determining the percentage of shareholding in that company?

Self-employed start and end dates

Overarching question: Across all of the options, we would like to understand which would be the most useful and would offer the most benefit for businesses and taxpayers. Do you think the options for collecting additional data we have prioritised here are the right ones, and are there any other areas where collecting more, better or different data would support tax administration and/or broader public service delivery?

Why better data is needed

The government often tailors or takes special account of the effects of interventions on micro-businesses, of which the self-employed and partnerships form a significant proportion; for example, through the use of Small and Micro Business Assessments for new policies. By giving the government more accurate information on trading activity, this information would improve our understanding of the characteristics of the trading population during the crucial make-or-break first year. This would help design and evaluate policy interventions in HMRC and elsewhere. It could also help inform HMRC’s small business compliance activities and allow help to be provided early in the business lifecycle. For the purpose of this consultation, we refer to the self-employed as someone who has trading income.

The situation at present

Income Tax Self Assessment for the self-employed and the equivalents in Making Tax Digital for Income Tax Self Assessment currently include fields asking:

• if your business started after 5 April 202[X], enter the start date DD MM YYYY
• if your business ceased after 5 April 202[X] but before 6 April 202[Y], enter the final date of trading

However, completion of these boxes is voluntary, which makes the data of limited use for analysis, and also means that we would be unable to use them in the delivery and targeting of any future economic support. The partnership return (SA800) asks for ‘Date of commencement’ and ‘Date of cessation’, in relation to the partnership business. And the partnership pages in an individual’s return (SA104) ask for the date that the individual joined, or left, the partnership.

Proposal for improvement

We would want to make these fields, and the equivalent in Making Tax Digital for Income Tax Self Assessment, compulsory. Due to the way HMRC’s systems work these fields would be redrafted into two sub-questions:

• start dates: did your business start after 5 April 202[X]? If yes, then the customer would enter the start date
• end dates: did your business cease after 5 April 202[X] but before 6 April 202[Y]? If yes, then the customer would enter the final date of trading

Question 17: How easy or difficult would it be for you/your clients to identify the dates that your business/your client’s business started and ended trading within a tax year?

Chapter 3: Obligations, safeguards and legislative framework

As this consultation covers proposals for HMRC to collect new data from its customers for cross-government as well as tax administration purposes, it will require new powers to be sought. These will go beyond those powers currently required to enable HMRC to collect the money that pays for the UK’s public services, helping the honest majority to get their tax right and making it hard for the dishonest minority to cheat the system.

HMRC’s existing powers have been granted to it by Parliament. Any changes to powers or new powers must be proportionate to the desired effect, and new powers can only be provided for through Parliamentary consent. HMRC considers utilising existing powers before considering new powers, in line with the powers and safeguards principles that were set out as part of the previous powers review in 2005-12: Review of HMRC’s Powers, Deterrents and Safeguards. We also intend to consult on draft legislation on these changes.

HMRC recognises the need for an appropriate balance between these powers and our customer safeguards. We ensure we exercise our powers in a proportionate way that maintains public trust, including the need to keep personal data safe and maintain the strictest safeguards on how data is held and used.

HMRC’s Privacy Notice describes how HMRC collects, uses and shares personal data in accordance with the UK data protection legislation.

HMRC carries out data protection impact assessments for new processing activities likely to have a higher risk to the rights and freedoms of individuals, particularly if there are proposals to change our statutory powers, and where new legal gateways are created to share personal data with other public sector bodies and tax jurisdictions.

Should any of the options within this consultation be pursued HMRC would expect to classify this as mandatory data to be completed as required. As such any returns not containing the required information would be treated as incomplete, in line with current rules and processes, including applying the relevant fees or appropriate penalties for late or incomplete information provided. Given the range of new data potentially required, and possible changes to processes and procedures, HMRC would take a reasonable and proportionate approach to application of any fees or penalties as part of any implementation of changes.

Chapter 4: Summary of consultation questions

Across all of the options, we would like to understand which would be the most useful and would offer the most benefit for businesses and taxpayers. Do you think the options for collecting additional data we have prioritised here are the right ones, and are there any other areas where collecting more, better or different data would support tax administration and/or broader public service delivery?

Question 1: Within this option, should HMRC prioritise improving self-employed data as set above, or another customer segment (e.g. employers, companies, partnerships, businesses registered for VAT)?

Question 2: Are there any areas of the tax system where HMRC’s collection of sectoral data could be streamlined or where we could collect this information in a different way? In particular, does your business provide sectoral data to HMRC (or other parts of government) in more than one place (for example, to HMRC through both VAT and Self Assessment; or to HMRC and to Companies House)?

Question 3 – for taxpayers and their agents: How easy or difficult are SIC codes to use for your business? What would make it easier for your business to find and input your SIC code(s)? What level of SIC would be most appropriate (i.e. three or four digits)? Do you prefer using the full version from the Office for National Statistics, or the condensed version used by Companies House?

Question 4 – for software providers: How easy or difficult would it be for you to incorporate SIC codes into your software, in a way that is easy for your customers to use?

Question 5: Would you find this information useful, if published in an anonymised form by the government (potentially linked with other datasets, such as salary, qualification or location information)?

Question 6 – for employers/payroll providers: How easy or difficult would you find it to categorise each of your employees by occupation? If you have used SOC codes previously, how easy or difficult to use, and what, if any, challenges do you find with them? Do you have any suggestions as to how we could modify or design this option in a way that minimises costs?

Question 7 – for the self-employed/their agents: How well do SOC codes describe your [/your clients’] occupation?

Question 8: How easy would it be to extract job titles from existing payroll systems into RTI?

Question 9: Within location data, is HMRC correct to prioritise improving data on businesses with multiple locations, and on the location of real economic activity?

Question 10: Are there any areas of the tax system where HMRC’s collection of location data could be streamlined or where we could collect this information in a different way? In particular, does your business provide detailed location data (e.g. covering multiple branches of your business) to HMRC (or other parts of government) in more than one place? Which avenue do you find the least burdensome?

Question 11: How easy or difficult would it be for your business [or, for agents, your customers] to provide work location information for each employee through RTI?

Question 12 – for payroll providers: How easy or difficult would it be for you to modify your software/your service to allow for the provision of work location information for each employee?

Question 13: How easy or difficult would it be to provide information on specific hours worked and/or actual hours worked?

Question 14: How predictable are the hours of your employees? How often do you use category e) hours worked (‘no regular pattern’), and what for? For example, pension payments or irregular working patterns (and if so what type of irregular pattern)?

Question 15: Do you agree that building on the pre-existing definition of a close company is the best approach? Are there any other approaches you would prefer?

Question 16: How great would the administrative burden be for you or your customers in splitting out dividend income from controlled companies and/or determining the percentage of shareholding in that company?

Question 17: How easy or difficult would it be for you/your clients to identify the dates that your business/your client’s business started and ended trading within a tax year?

Next Steps

Following this consultation, the government will publish a summary of responses that reflects on the feedback received, confirms the changes we wish to make and the timetable for making these changes in the autumn. Subject to the response to this consultation, HMRC propose to legislate for any changes in Finance Bill 2023/24 at the earliest.

Assessment of impacts

We will use this consultation process to gain a better understanding of the likely impacts of these changes on customers, an initial assessment is below but conversations with stakeholders will help to shape our understanding and design changes in the most efficient way possible.

Impact	Comment
Economic impact	This data could help with economic support in the event of a future economic crisis. It will also help design new economic interventions and policies, such as in relation to levelling up, or by giving a better understanding of individual economic sectors or labour market dynamics. The data could also help the functioning of the labour market by increasing the information available to workers (and potential workers) and firms.
Impact on individuals, households and families	Individuals’ personal data would be shared with HMRC, including their trade and profession. Individuals would be able to access better information on employment prospects, that could help inform a range of decisions, for example what courses to apply for.
Equalities impacts	Further consideration of potential equality impacts will be undertaken following consultation, including support for customers who need extra help.
Impact on businesses and civil society organisations	All of this data would be provided by businesses, and there is therefore an administrative burden on business associated with each option. This will be quantified prior to any final decision being made. On the other hand, businesses would be given a more granular understanding of the labour market, which could help with investment and hiring decisions.
Impact on HMRC or other public sector delivery organisations	This data would have a delivery impact on HMRC, in particular on the IT systems associated with PAYE, ITSA and MTD.
Other impacts	N/A

The consultation process

This consultation is being conducted in line with the Tax Consultation Framework. There are 5 stages to tax policy development:

Stage 1: Setting out objectives and identifying options Stage 2: Determining the best option and developing a framework for implementation including detailed policy design Stage 3: Drafting legislation to effect the proposed change Stage 4: Implementing and monitoring the change Stage 5: Reviewing and evaluating the change

This consultation is primarily taking place at stage 2 of the process. The purpose of the consultation is to identify which of the six options to take forward (and, within the ones that are taken forward, which to prioritise); and, within those options, to determine the best means of design and implementation.

How to respond

Please respond by 12 October 2022 to responsivenessdataconsultation@hmrc.gov.uk. Queries can be directed to the same address.

A summary of the questions in this consultation is included at chapter 4.

Please do not send consultation responses to the Consultation Coordinator.

Paper copies of this document in Welsh may be obtained free of charge from the above address.

When responding please say if you are a business, individual or representative body. In the case of representative bodies please provide information on the number and nature of people you represent.

Confidentiality

HMRC is committed to protecting the privacy and security of your personal information. This privacy notice describes how we collect and use personal information about you in accordance with data protection law, including the UK General Data Protection Regulation (UK GDPR) and the Data Protection Act (DPA) 2018.

Information provided in response to this consultation, including personal information, may be published or disclosed in accordance with the access to information regimes. These are primarily the Freedom of Information Act 2000 (FOIA), the Data Protection Act 2018, UK General Data Protection Regulation (UK GDPR) and the Environmental Information Regulations 2004.

If you want the information that you provide to be treated as confidential, please be aware that, under the Freedom of Information Act 2000, there is a statutory Code of Practice with which public authorities must comply and which deals with, amongst other things, obligations of confidence. In view of this it would be helpful if you could explain to us why you regard the information you have provided as confidential. If we receive a request for disclosure of the information we will take full account of your explanation, but we cannot give an assurance that confidentiality can be maintained in all circumstances. An automatic confidentiality disclaimer generated by your IT system will not, of itself, be regarded as binding on HMRC.

Consultation Privacy Notice

This notice sets out how we will use your personal data, and your rights. It is made under Articles 13 and/or 14 of the UK General Data Protection Regulation.

Your data

We will process the following personal data (where provided):

Name
Email address
Postal address
Phone number
Job title

Purpose

The purpose(s) for which we are processing your personal data is to assist in the design of policy for the collection of new data.

Legal basis of processing

The legal basis for processing your personal data is that the processing is necessary for the exercise of a function of a government department.

Recipients

Your personal data – in particular, details on which organisations responded with which views – may be shared with other Government departments that have an interest in this policy. This will primarily, though not necessarily solely, be HM Treasury and to a lesser extent the Department for Education.

Retention

Your personal data will be kept by us for 6 years and will then be deleted.

Your rights

You have the right to request information about how your personal data are processed, and to request a copy of that personal data.

You have the right to request that any inaccuracies in your personal data are rectified without delay.

You have the right to request that any incomplete personal data are completed, including by means of a supplementary statement.

You have the right to request that your personal data are erased if there is no longer a justification for them to be processed.

You have the right in certain circumstances (for example, where accuracy is contested) to request that the processing of your personal data is restricted.

Complaints

If you consider that your personal data has been misused or mishandled, you may make a complaint to the Information Commissioner, who is an independent regulator. The Information Commissioner can be contacted at:

Information Commissioner's Office
Wycliffe House
Water Lane
Wilmslow
Cheshire
SK9 5AF

0303 123 1113 casework@ico.org.uk

Any complaint to the Information Commissioner is without prejudice to your right to seek redress through the courts.

Contact details

The data controller for your personal data is HMRC. The contact details for the data controller are:

HMRC
100 Parliament Street
Westminster
London
SW1A 2BQ

The contact details for HMRC’s Data Protection Officer are:

The Data Protection Officer
HMRC
14 Westfield Avenue
Stratford
London
E20 1HZ

advice.dpa@hmrc.gov.uk

Consultation principles

This call for evidence is being run in accordance with the government’s Consultation Principles.

The Consultation Principles are available on the Cabinet Office website.

If you have any comments or complaints about the consultation process, please contact the Consultation Coordinator.

Please do not send responses to the consultation to this link.