Guest Editorial by Robin Williamson

The Digital Divide is Hurting Some Taxpayers

On Tuesday 8 May the Low Incomes Tax Reform Group published a report on digital exclusion. It is based on the findings of a survey involving 758 clients of three advice charities – TaxHelp for Older People, TaxAid, and Migrant Resource Centre. As government increasingly gives priority to online channels over more traditional forms of communication, the report examines the effect this strategy is having on those who are unable to use computers or access the internet, or who struggle to do so.

The findings of the report are sobering. Where citizens are obliged to use online channels to comply with their tax obligations, significant numbers are becoming unwitting – and unwilling – defaulters on their tax obligations. Those most affected are older people, those with disabilities that impede their use of computers, those living in areas where there is no or insufficient broadband connection, people on low incomes who cannot afford the equipment or internet subscriptions, and those with language difficulties.

To the surprise of some, digital exclusion is prevalent among small businesses. The proportion of those with disabilities who work and are self-employed is higher than in the general population, and a significant minority of micro-businesses are run by older people.

HMRC’s policy of making it obligatory to interact with them online (“mandation”) has already taken hold in corporation tax, VAT and PAYE. It will be severely tested under RTI (“real time information” whereby employers transmit employee data to HMRC on or before running the payroll). “Mandation” is supposed to be tempered by “assistance to digital”, but much more thinking must be done in this area if the words of the Minister for the Cabinet Office, that “nobody will be left behind” in the digital age, are not to sound increasingly hollow.

The LITRG report, with its rigorous analysis of who is digitally excluded and why, and what this means for their fulfilment of their tax obligations, should be read and heeded by all those responsible for policy in this area.

Robin Williamson is Technical Director of LITRG - The Low Incomes Tax Reform Group