Set for launch in 2015, Identity Assurance (IDA) marks a new method for taxpayers, businesses and agents to file tax returns and make other online submissions using government systems. Steven Checkley, who is Commercial Director of TaxCalc and heads up the BASDA Identity Assurance (IDA) Working Party, looks at the implications accountants.
At the end of October 2013, HMRC introduced a beta programme for the first in a long line of new online services. This service, targeted towards UK employees, provides an online method for notifying HMRC that new benefits in kind are being received. Run in parallel with existing postal and telephone services, employees now have a new method for ensuring that their tax codes are kept up to date and avoid surprising catch-up deductions and demands made in future tax years.
Whilst this sounds like a fairly simple operation, it comes with one significant new mode of operation: it introduces a new online method of verifying one’s online identity. It’s called Identity Assurance.
As its name might suggest, Identity Assurance is a government initiative to enable online transactions to take place with the assurance that the person making a request of a government service is who they say they are. In other words, it aims to combat online fraud. Every citizen of the UK, businesses and agents (not just accountants, but lawyers, carers, those holding power of attorney etc.) will be required to validate their identity whenever they interact online with the government. Whether filing a tax return, claiming benefits or even ordering a wheelie bin online from the local council, they will be required to validate their identity.ple operation, it comes with one significant new mode of operation: it introduces a new online method of verifying one’s online identity. It’s called Identity Assurance.
The fact that this has just gone into beta may come as a surprise to you. After speaking at a couple of recent seminars on the matter, it certainly seems that few practitioners are aware of the situation and the impact that this may have on their businesses.
So what is the impact?
Currently set for a launch during 2015, there will be an alternative method of filing tax returns other than the Government Gateway. Under Identity Assurance, a ‘responsible officer’ of the firm will have to apply for new credentials that will be used during the filing process. However, the credentials need to be independently and personally validated – and for that everyone will need to use an approved Identity Provider.
Her Majesty’s Government is not keen on storing personal data about you or your business for this purpose. Too many times in recent years have there been examples of data being found on trains for this to be an issue. So, private enterprises have been invited to provide this instead.
Of the initial eight companies, you’ll recognise some household names. The Post Office, PayPal and Experian are all familiar. Less familiar perhaps are Verizon, Mydex, Digidentity, Cassadian and Ingeus but all are available to provide you with an online account. The intention is that this will grow, being supplanted by banks and other key holders of citizen and business data.
Every citizen and business that wishes to use online government systems will need to create an online account with an Identity Provider. They will be asked questions during the sign up process for the online account that only they should know the answers to. Whenever a government system wants to confirm their identity, again, they will be asked questions that only they can answer.
In the long term, the aim is that identity thieves will be thwarted because it’s impossible for them to know everything personal and pertinent to someone. Furthermore, as iPhones and other devices begin to use biometric security, Identity Providers can tap into this and use such unique functions in the process. This also enables the government, in theory, to process more transactions automatically because tax refunds, benefits and wheelie bins are being provided to bona fide citizens.
Ultimately, the aim of HMRC and other departments that use the Government Gateway is to migrate the UK towards Identity Assurance. As a technology that has been in place for some 15 years, the Gateway has nearly outlived its purpose and become rather out-moded. How long the migration process will take is the source of some debate and whilst it could in theory stick around until 2019, my instinct is that we will see certain submissions such as Self Assessment and Corporation Tax being turned off in March 2017.
So, taking the above on board, it is evident that your firm’s current method of filing tax returns is going to change and, sometime before an undisclosed date between 2015 and March 2017, you will need to have acquired an online account with an Identity Provider and acquired new filing credentials with HMRC.
But there’s more. . .
Under current proposals put forward by the Cabinet Office, any staff members that file returns – even if they are only processing them – will need to be identified and potentially personally validated under the scheme (almost certainly if they directly access a government system on your behalf). Currently, no such identification or validation takes place and this will necessarily create a new administrative burden on firms. Those firms that have larger teams and process tax returns, payroll, VAT and so on, will need to find time to handle these registrations.
There is ongoing negotiation with HMRC and HM Cabinet Office in regard to mitigating the impact of these upcoming changes, spearheaded by organisations such as BASDA and software providers such as TaxCalc. So far, aside from some trial services (such as the one aimed at employees to update their tax codes), much of the theory and policy behind Identity Assurance is still being drawn up.
Through constant education as to how accountancy practices are run, key concessions have been earned, including an extension to the survival of the Government Gateway, which was key to help firms learn more and avoid delays at critical times, and an assurance that costs involved in running the Identity Assurance scheme will not be passed onto the end user. It would also transpire that for an agent, a validation on a ‘per tax return’ basis is thankfully not going to be required.
But we still have far to go. Under the scheme, it is envisaged that all validations of identity occur outside of 3rd party software products and there is still the spectre that staff will need their own online accounts and validations. This concerns us because as the number of Identity Providers increases (and it will), so too does the prospect of each providing a different user experience. Matters such as ‘who to call when things stop working’ have yet to be determined as the software provider will, rightly or wrongly, be the first point of contact.
Complications might also arise for those out there that might work for multiple employers or work as a subcontractor for a firm whilst maintaining their own client list. Will such accountants have multiple identities, one for each employer or client? Or one for themselves that can be used at each port of call?
A lot of this needs challenging and bottoming out – and this exactly what BASDA, TaxCalc and other representatives in the industry are doing. Although 2015 sounds like a long way off (and 2017 even further), it was only a couple of years ago that we saw the introduction of iXBRL and changes it brought. Identity Assurance promises change on a much larger scale.
This article was first published by ICPA in January 2014.
Keep up to date with Identity Assurance via the BASDA Identity Assurance Group on LinkedIn or, for more information, contact info@basda.org