Policy paper

Will tax simplification still be needed as technology advances?

Today, the Office of Tax Simplification publishes a discussion paper on the implications of using technology to simplify tax.


OTS Technology Paper


To date, tax simplification has focused on removing complexities in order to make the tax system clearer for taxpayers and administrators. In the future, technology has the potential to manage the complexities of the tax system leaving taxpayers needing to only press a button to meet their tax obligations.

The OTS today publishes a discussion paper on technology and tax simplification that looks more broadly at the challenges, as well as the opportunities, that these emerging technologies pose.

Technology is already being used by individuals and their agents to facilitate online completion of tax returns through HMRC’s commendable programme of digitisation, Making Tax Digital. However, while technology can ease the process, it may also create a future risk for taxpayers, as easier completion will not remove the need for individuals and businesses to understand and comply with their tax obligations.

If software and technological advances reduce taxpayers’ understanding of how much tax they should pay and why, this could cause problems, for example, when things go wrong. The OTS’s paper explores what can be done to empower taxpayers to sufficiently understand their tax, and their obligations, while benefiting from advances in technology.

The report suggests the following key points for the government to consider:

  • HMRC expanding the current personal tax account to deliver better targeted guidance alongside looking at automatically enrolling all taxpayers into this service

  • How to mitigate the risk of taxpayers losing sight of their obligations through the use of technology

  • Continuing to monitor private sector technological innovation with the potential to improve taxpayers’ experience of managing their tax affairs

  • The potential for using new technology to engage with the public more efficiently and effectively while saving resources

  • Monitoring the impact of the General Data Protection Regulation on taxpayer choices for security and privacy, and convenience

  • Active monitoring of the impact of moves towards a cashless society and risks of digital exclusion

Paul Morton, OTS Tax Director, said:

Technology has transformed much of our day to day lives, in some areas almost beyond recognition. Although many tax-related activities have benefited from a digital approach we are still at the early stages of the potential transformation. This paper explores some of the more difficult questions that new technology presents. It is important that some of these areas are addressed sooner rather than later and we hope our paper will encourage this.

Notes for editors

The OTS is the independent adviser to government on simplifying the UK tax system, to make it easier for the taxpayer. It does not implement changes – these are a matter for government and for parliament.

The OTS works to improve the experience of all who interact with the tax system. It aims to reduce the administrative burden - which is what people encounter in practice - as well as looking to simplify the rules. Simplification of the technical and administrative aspects of tax are important, both to taxpayers and to HMRC.

Press Enquiries only please contact Denise Shaw, OTS Press Officer

Phone: 03000 585017

Published 17 January 2019