HMRC must do more to support disabled people to manage their tax affairs if the Government’s drive to halve the disability employment gap is to succeed, says the Low Incomes Tax Reform Group (LITRG).
LITRG has told a wide-ranging consultation that certain tax rules and HMRC practice work against the Government’s commitment to halve the disability employment gap. Its response goes on to highlight some particular difficulties faced by disabled people and employers in the tax and related benefits system and makes recommendations as to how to remove those barriers.
LITRG points out that disabled people might have more confidence in contacting the tax authority if they were made aware of concessions, such as the opportunity for those with hearing or speech impairments to use an online form rather than the telephone to request a face-to-face meeting with the Needs Extra Support service.
The tax group says that a more accessible HMRC is particularly important given that a number of working disabled people will be on Employment Support Allowance, undertaking ‘permitted’ work and may have tax coding problems. Tax credits are a commonly stated enabler of employment for disabled people but are often difficult to manage without regular contact with HMRC to report changes of circumstances.
The tax campaigners have also called for greater co-operation between the DWP and HMRC regarding Access to Work funding. Access to Work funding can be invaluable in supporting a disabled person to create a successful business, but there is not enough customer information on employment tax considerations when the funding - when given to a self-employed person - is used to buy the services of a support worker. LITRG’s experience is that the DWP, which delivers the Access to Work programme, does little to point the scheme’s users in the right direction.
Anthony Thomas, Chairman of LITRG, said:
“It is a pity that some disabled people in work may still not always get the support they need from HMRC. Features such as telephone voice recognition software, the relentless drive to digital and lack of technical information on GOV.UK can make their lives more difficult.
”HMRC must work harder to understand the barriers to engagement and ensure that disabled people’s needs are catered for so nobody is left feeling disenfranchised, or worse, non–compliant.
“One way the Government could act on our concerns is to undertake a review of the relationship between the Government Digital Service, HMRC and the GOV.UK website, as we believe that HMRC needs to be given back more control of online guidance related to tax and other HMRC administered services.
“Overall improvements would foster a sense of trust between HMRC and its disabled users and make it more likely that they will ask for the help they need to manage their tax and tax credit affairs.”
LITRG also regrets HMRC’s recent conclusion that there are no equality impacts from its Making Tax Digital (MTD) programme. MTD is capable of delivering benefits over the years to come, but there is a risk that many disabled people in business will suffer a real burden if they find they are mandated not only to transact with HMRC digitally, but also to keep records in a prescribed digital format.
Anthony Thomas said:
“While the plan is to offer an exemption from MTD to individuals for whom it is not reasonably practicable to interact with HMRC online for reasons which include disability, this is not a complete solution. For example, it does not cater for those whose disability does not prevent the use of computers and the internet but who are likely to incur additional costs of compliance not encountered by their non-disabled counterparts.
‘’We were therefore surprised to say the least that HMRC has not published an Equality Impact Assessment (EQIA). Such omissions risk damaging HMRC’s reputation in the eyes of disabled taxpayers and therefore work against wider policy drives like getting more disabled people working.’’
Notes for editors
1. The consultation was arranged by the DWP and the Department of Health. The purpose of LITRG’s response is to highlight what it sees as some current barriers to work in areas such as income tax, VAT, NIC, and tax credits. It makes recommendations on where it thinks rules and practice could be changed to improve incentives, reduce burdens and thus contribute to the Government’s overall objective. Some of LITRG’s other recommendations include:
· All employed disabled people should be able to claim as an employment expense the costs of putting themselves, as far as possible, on a par with non-disabled people.
· There should be VAT relief for modifications in the workplace.
· From April 2018, that the system of NIC credits should be extended to disabled people whose profits from self-employment do not exceed the small profits threshold.
· HMRC should treat any ‘strengthened self-employment’ test in tax credit cases involving disabled people sympathetically, taking account of the fact there may be particular circumstances to consider.
LITRG’s recent submission can be read here.
2. Contribution-based Employment and Support Allowance is taxable but is paid gross. Any tax due on it is usually collected by adjusting the tax code on another source of income that is taxed under PAYE.
3. An Access to Work grant can pay for practical support if someone has a disability, health or mental health condition to help them start working, stay in work or move into self-employment or start a business.
4. Low Incomes Tax Reform Group
The LITRG is an initiative of the Chartered Institute of Taxation (CIOT) to give a voice to the unrepresented. Since 1998 LITRG has been working to improve the policy and processes of the tax, tax credits and associated welfare systems for the benefit of those on low incomes.
The CIOT is the leading professional body in the United Kingdom concerned solely with taxation. The CIOT is an educational charity, promoting education and study of the administration and practice of taxation. One of our key aims is to work for a better, more efficient, tax system for all affected by it – taxpayers, their advisers and the authorities. The CIOT’s work covers all aspects of taxation, including direct and indirect taxes and duties. The CIOT’s 18,000 members have the practising title of ‘Chartered Tax Adviser’ and the designatory letters ‘CTA’, to represent the leading tax qualification.
Contact: Hamant Verma, External Relations Officer, 0207 340 2702 HVerma@ciot.org.uk (Out of hours contact: George Crozier, 07740 477 374)More Articles by Chartered Institute of Taxation (CIOT) ...