By Claire West

HMRC’s Digital Services are to be transformed by £200 million of Government investment, as taxpayers get direct access to their tax affairs.

By April 2015, up to two million people will be able to take control of their tax affairs through their own online accounts, HMRC announced recently.

Nearly five million small businesses will also be able to interact with HMRC digitally, gaining much greater control over their tax affairs. This will mean less red tape, and more practical and useful support and advice delivered online.

Digital transformation will enable people to spend more time developing their businesses and less on paperwork and bureaucracy. It also means a fairer, more level playing field, by helping HMRC to identify the minority who seek to get around the rules.

The new system will remove unfair competitive advantage from those who try to cheat the system.

Exchequer Secretary David Gauke said:

We want to give people the power to manage their tax affairs online as easily as they manage their bank accounts and this investment of over £200 million will allow HMRC to deliver a digital tax service fit for the twenty-first century.

For individuals, this will mean a better understanding of what they are paying and where it is being spent. For business people, it will give the control over their tax affairs and flexibility to manage them that allows them to focus on growing the business.

HMRC Chief Executive Lin Homer said:

This is a huge vote of confidence in HMRC. I am delighted that we have secured this investment, which will enable us to transform our increasingly popular digital services and build a groundbreaking digital tax service. We are committed to doing business with our customers in the way they want to do it.

In January 2013, 82.5% of self assessment taxpayers chose to file using HMRC’s digital Self Assessment online service.

Digital transformation will reduce HMRC’s costs by £51 million in 2015-16.

By 2015-16, up to two million individual customers will be able to carry out transactions online, such as:

self-serving their repayments

viewing their tax codes and how they are made up

updating their personal details online

handling end of year reconciliation online

reporting additional sources of income, such as interest, rental and dividend income

receiving targeted online support when approaching retirement and

receiving correspondence for these services via their online account

By the end of 2015-16 SMEs (small and medium enterprises) and their agents will be able to:

access nearly everything they need through a single personalised homepage

get direct access to all the online transactions relevant to them

view a personalised tax calendar with digital alerts

complete more transactions online (for example, telling HMRC that they’ve ceased trading)

get answers to their questions through tailored online tools, thereby reducing post and phone volumes

get relevant cross-Government information where appropriate and interact with HMRC digitally (in most cases)