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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 LITRG.

Introduction

The Low Incomes Tax Reform Group (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.

Recommendations

Removing barriers

LITRG points out that disabled people might have more confidence in contacting the tax authorities 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. 

Improved contact with HMRC

The tax group says that a more accessible HM Revenue and Customs (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.

Access to Work funding

The tax campaigners have also called for greater co-operation between the Department for Work and Pensions (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.

More support needed

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 the LITRG’s concerns is to undertake a review of the relationship between the Government Digital Service, HMRC and the GOV.UK website, as the group believes that HMRC need 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 their disabled users and make it more likely that they will ask for the help they need to manage their tax and tax credit affairs.

Making Tax Digital

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.

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.

LITRG was therefore surprised that HMRC had 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.

Other recommendations

LITRG also makes other recommendations where it thinks rules and practice could be changed to improve incentives, reduce burdens and thus contribute to the Government’s overall objective. These 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 that there may be particular circumstances to consider.

Useful links

LITRG submission: Improving lives: work, health and disability Green Paper
Government consultation