HMRC change to data collected from customers – Law Society response

HM Revenue and Customs (HMRC) is consulting on changes to the data HMRC requires from employers, some shareholders in owner-managed businesses and customers who are self-employed. Find out what this means for solicitors.

The proposals

This is a consultation from the draft Finance Bill 2023/24, which provides draft legislation for:

  • employers – who will be required to provide information on employee hours worked via Real Time Information PAYE reporting
  • shareholders – in owner-managed businesses who will be required to provide the amount of dividend income received from their own companies separately to their other dividend income, alongside the percentage share they hold in their own companies via their self-assessment return
  • the self-employed – who will be required to provide information on start and end dates of self-employment via their self-assessment return

Our view

The administrative and cost burden to employers may be great.

Working hours data is already provided in some capacity for contracted workers, but the need to collate this information to provide a more accurate picture may leave room for some systemic errors or difficulties obtaining information across large organisations with multiple databases.

We also question the need to introduce a financial penalty for failure to provide the relevant information.

Given the purpose of the information being sought (and that it is not likely to be directly relevant to the taxpayer’s own tax liability), a small amount of non-compliance would not seem to be particularly material.

What this means for solicitors

More information will be required on the working hours of solicitors and provided to HMRC via Real Time Information PAYE reporting.

Next steps

This consultation closed on 12 September 2023.

Further technical consultation may take place before these amendments take effect.

This measure will be enacted by parliament after necessary readings and amendments take place, no earlier than 2025/26.

Read the consultation on the GOV.UK website

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