HMRC to go Digital for Tax Returns and Rebates
In accordance with the government’s aim of ‘modernising the tax system’, HMRC is to stop sending out cheques when issuing rebates instead repaying customers with direct bank transfers.
The decision is part of a broader move to digitise the entire tax system that was announced last year. This includes replacing the current tax return system with online tax accounts to be used by “millions of individuals and businesses”.
According to David Gauke, Financial Secretary to the Treasury, the new accounts will “bring together each taxpayer’s details in one place, just like an online bank account, so they can register for new services, update their information, and understand quickly and easily what they need to pay — without ever having to complete a tax return again.”
So far, around 4 million customers have signed up to HMRC’s new online personal tax accounts, and they hope that that number will continue to increase. Setting up a personal tax account requires a taxpayer to first create a government gateway account, which is done using the customer’s National Insurance Number, as well as passport numbers or details from recent payslips.
The decision to move tax rebates online fits with this general aim and is set to drastically speed up the actual repayment process. Under the current system, tax rebates are issued as cheques, which can take up to two weeks to arrive, and then a further few working days to actually clear once they are cashed.
With the new bank transfer system in place, rebates can be expected to clear in a matter of days.
HMRC’s director-general of customer service, Ruth Owen, explained: “This new service puts customers in control of their tax affairs allowing them to claim any money owing to them immediately. They can claim at a time that suits them, from a device of their choice, securely, and without needing to wait for a cheque in the post.”