External Working Group on Timely Payments

Terms of reference

Background

The UK government has committed to establishing an external timely payment task force in response to the call for evidence on timely payment.

The group will collaborate and co-design aspects of the timely payment policy and proof-of-concept calculation during the year, working together to understand the implications and impacts of timely payment for different types of companies and sectors, and to identify potential mitigations. The government will not make a calculation during the year until it is certain that it can do so accurately and reliably.

Through participatory design, the group expects to develop policies and/or systems that support taxpayers and mitigate or minimize the impacts of timely payment.

The government has pledged that no changes to payment deadlines will be implemented in this Parliament, acknowledging that this is a long-term ambition.

Goals

The External Timely Payment Working Group, using its diverse knowledge, experience and information resources, will:

Scope

This group will only consider timely payment for taxpayers of income tax under self-assessment and corporate tax under self-assessment for those who are not subject to the quarterly installment system.

While co-design will help shape aspects of in-year calculation proof-of-concept and timely payment policy, the government will ultimately make policy decisions based on data and evidence to to ensure that policy outcomes are suitable for a wide range of users and to ensure the delivery of the wider tax administration strategy by progressively modernizing the tax system.

First phase – the proof of concept of the calculation during the year

The design phase of the project begins in April 2022 and as such the current priority is for the External Timely Payment Working Group to contribute to the proof of concept design of the in-year compute through the following topics:

  • data requirements and acquisition; explore how we acquire the data needed to perform an in-year calculation across a wide range of industries and models to ensure we can test calculations on complex, real-world scenarios
  • data ingestion; to explore how to ingest data most efficiently in real time and assess and mitigate impacts on data providers (third parties, intermediaries and taxpayers)
  • accuracy of calculation; to explore how to accurately calculate liability, including how to reconcile indemnities, reliefs, dividends, etc. and expenses. It will also look at how best to reconcile multiple and seasonal/fluctuating incomes
  • customer barriers and support; this theme will explore what the customer experience of computing will be like during the year and assess potential barriers to its use, such as digital exclusion. It will explore ways to mitigate barriers and how best to help customers use the system easily and efficiently
  • interaction with other programs; this theme will explore how the in-year reckoning will align with or impact broader government services and strategies such as Universal Credit, government grants, tax digitization, COVID recovery, and more.

Second phase – developing a timely payment policy

The second phase will examine broader themes for the development of the timely payment policy. Of note, the 2 phases are inextricably linked, and the External Timely Payment Working Group will work iteratively as the development and proof of concept results of the in-year calculation will help to sequence and prioritize the themes. The initial topics for the External Working Group on Timely Payment to consider are:

  • cash flow; assess impact across different business sectors (including exploration of sector-specific influences, e.g. seasonal workers)
  • administrative costs; assess administrative burdens in different business sectors, including represented and unrepresented sectors
  • vulnerable taxpayers; assess unique challenges such as interaction with the DWP and benefit system, digital exclusion, etc.
  • a flexible one-time payment model; assess the challenges of a “one-size-fits-all” approach to timely payment and whether a more flexible system would be more appropriate (while acknowledging that this may introduce additional complexity)

Structure and frequency

Meetings of the External Timely Payment Working Group/Subgroup will be held prior to major information requirements or decision points of the design and delivery of the in-progress compute proof of concept. year to maximize co-design opportunities while minimizing additional burdens on stakeholder time; we expect this to be no less than every 3 months.
Given the extent of payment deadlines and to ensure the most effective use of expertise within the group, sub-groups will be formed to work in detail on particular issues or challenges.

The establishment of subgroups will be an iterative process and will reflect policy or system needs as timely payment is developed. The external one-time payment working group will collectively decide and agree on the sub-groups, including the definition of objectives and composition; the secretariat will draft terms of reference for each subgroup, which will be approved by the working group.

Meeting logistics

External working group Punctual payment:

  • chair: the one-time payment external working group will be chaired by a senior official HMRC
  • secretariat: a secretariat will be provided by the HMRC timely payment team
  • communications: communications and agendas will be sent at least 3 working days before the meeting. The secretariat will note the discussions and actions and provide a reading to all members

Subgroup

  • chair: each sub-group will be chaired by a representative of HMRC
  • secretariat: a secretariat will be provided by the HMRC Timely payment team
  • communications: communications and the agenda will be sent at least 3 working days before the meeting. The secretariat will note the discussions and actions and provide a reading to all members

Responsibility and conduct

Responsibility and conduct:

  • To support the aim of having open conversations and to facilitate collaborative working, our discussion will be underpinned by the principles of the Chatham House Rule, as further explained on the Chatham House website
  • if necessary, certain contributions to the external working group and timely payment sub-groups will be made in the strictest confidence to protect the integrity of HMRC and other government systems. If necessary, this will be specified at the beginning of the meeting.
  • participants in the External Timely Payment Working Group may use the information gained from the discussions for internal research and policy development purposes
  • when producing meeting reports or HMRC, HMTnor will Working Group participants attribute any comments or views to individual members of the External Timely Payment Working Group or its sub-groups, without first seeking their permission
  • HMRC do not enter into commercial agreements with participants. Any commercial call for tenders will be carried out in accordance with the rules and legislation in force.

Members

An author, with an interest in barriers and customer support
Digital apari
Chartered Accountants Ireland
Chartered tax institute
Bite
Deloitte
Department of Work and Pensions
To win
Ernest and Young
Grant Thorton
Innovate Taxation
Institute of Chartered Accountants
Institute of Chartered Accountants in England and Wales
KPMG
Low Income Tax Reform Group
Moore Kingston Smith
National Farmers Union
Tax Simplification Office
Sander Events
Scottish Government
Tax policy advice
Caltax
The Association of Tax Technicians
The Country Land and Business Association
The Federation of Small Businesses
The bar
Detached


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Elaine R. Knight