A key part of Labour’s fiscal strategy is to ensure HMRC have the resources to collect more tax revenues. As James Murray, Exchequer Secretary to the Treasury stated in parliament before the summer recess, the government will ‘invest in HMRC’s technology infrastructure, helping to make HMRC more efficient and improve taxpayers’ experience of interacting with HMRC’.

As we enter the ‘age of artificial intelligence (AI)’, technology is beginning to impact how governments around the world collect tax like never before. Whilst the UK is approaching this change at a slower pace than some other countries, keep an eye out for technology-related announcements in Labour’s first Budget since being elected – due on 30 October. 

Our predictions for the impact of technology on how everyone pays their fair share of tax are set out below. Depending on your viewpoint, these present both an opportunity and a risk to how tax is paid and administered.

• Increased state role in personal finances: The ongoing Making Tax Digital initiative moves towards real-time access to information for HMRC. Future systems may link in with banks to pre-calculate and pre-collect tax with each transaction, significantly altering our financial relationship with the State; and
• Tax filings may feel more like annual insurance renewals: More connected technology could mean tax is collected closer to the point income is received or recognised, with online accounts and annual ‘true-up’ reviews replacing traditional tax returns; and  
• Tax education in schools: Errors and mistakes are the leading component of unpaid tax and the ‘tax gap’. Experts increasingly suggest including tax lessons in the national curriculum to reduce errors and improve awareness of tax; and
• Upgrading Systems: Many businesses will need to upgrade outdated computer systems to connect with HMRC in the near term. This digital accounting revolution will require significant investment, potentially impacting growth and investment by taking time and resources which could have otherwise been focused elsewhere; and
• The robots are coming: Following on from internet banking, we can expect to see more accounting firms using online client portals for secure and efficient communication with their clients. Whilst this may lead to a growth in firms offering ‘self-service’ or ‘automated’ tax advice powered by artificial intelligence, many advisors will retain an element of human review and offer clients the option to have a personal connection to a named tax professional.

With all this in mind, here are five tips to stay ahead of the game as technology inevitably impacts how your tax is paid.

1. Education, education, education: Knowledge is power and a basic appreciation of how the tax system works can transform your experience with HMRC.
2. Register for an HMRC personal tax account: These accounts show the information HMRC uses to calculate your tax liability and provide guidance links.
3. Be proactive: Conduct an annual review of your tax position to plan filings and take advantage of tax reliefs.
4. Make a personal ‘data map’: Ensure you understand where the information you need to calculate your tax liabilities comes from, and that it’s accurate and as easy to compile as possible.

Seek professional advice for complex matters: The UK tax system can be complex. Professional accountants or tax advisors can help manage complex tax affairs and will increasingly build knowledge on how to use AI and other technologies safely when it comes to undertaking tax advice. 

Ensure your advisor is reputable and supportive. Look for those with links to accredited organisations such as the Chartered Institute of Tax, Institute of Chartered Accountants or the Association of Taxation Technicians.