Page - 1 -

Revenue Jersey Public Briefing

Businesses

5 October 2018

Page - 2 -

Table of contents

1. One Government ............................................................................................................................................. 3

Organisational structure ...................................................................................................................................... 3

2. Revenue Jersey remit ...................................................................................................................................... 4

What we’ll do ....................................................................................................................................................... 4

Compliance framework ........................................................................................................................................ 5

What we’ll deliver ................................................................................................................................................ 5

3. Programme aims up to 2020 ........................................................................................................................... 6

General public roadmap ...................................................................................................................................... 6

What we’ll deliver: priorities for phase 1 .............................................................................................................. 7

4. What you’ll see ................................................................................................................................................ 8

In the public domain ............................................................................................................................................ 8

Law reform proposals .......................................................................................................................................... 8

Proposed effective 2019 ...................................................................................................................................... 9

Other legislative changes .................................................................................................................................... 9

Social security contributions proposed Orders .................................................................................................. 11

When interacting with us ................................................................................................................................... 11

Better integration of international data .............................................................................................................. 11

5. Behind the scenes ......................................................................................................................................... 12

People programme ............................................................................................................................................ 12

6. Activity milestones ......................................................................................................................................... 13

The Revenue Management System (RMS) ...................................................................................................... 13

Policy, legislative reform and process ............................................................................................................... 13

7. Benefits for you .............................................................................................................................................. 15

8. What’s next .................................................................................................................................................... 15

9. Appendices .................................................................................................................................................... 16

A time of transition ............................................................................................................................................. 16

Approach ........................................................................................................................................................... 16

The compliance framework: policy and law ...................................................................................................... 17

Promoting “effortless compliance” ..................................................................................................................... 17

Preventing non-compliance ............................................................................................................................... 17

Responding to non-compliance: the annual compliance programme and tax campaigns ............................... 17

3

1. One Government

Organisational structure

Chief Executive, Charlie Parker, has outlined his plans for restructuring the States of Jersey. The new structure will focus on collaborative working across departments, improving services, effectiveness and value for money. There will be 40 posts at the two most senior levels, a reduction of 26 from the current structure.

Revenue Jersey will take its place within the new structure for States Treasury and Exchequer.

4

As part of the new One Government structure, Customer and Local Services will provide customer support for all public customer transaction services, including Revenue Jersey.

2. Revenue Jersey remit

What we’ll do

Revenue Jersey will make it easy for you to meet your tax and other revenue obligations and you can trust we’ll take fair and effective action against the minority who evade paying what they should. We’ll deliver professional, well-informed, accessible and cost effective services to the people of Jersey.

What to expect:

Expanded, improved services for islanders

Modern, relevant legislation aligned to international standards

Online access, 24/7 for the most common customer queries

Reduced assessing and collection costs

More focus on ensuring all customers can understand and meet their obligations

Targeted penalties proportionate to behaviours, from carelessness to deliberate evasion.

5

Compliance framework

Our overarching aim with the transformation programme has always been to put the building blocks in place that are needed to transform the tax collection function into a modern revenue administration function that reflects internationally recognised and approved practices. The foundation of this transformation is the adoption of the compliance-based framework. It guides the shape of our future operating model for the function, the suite and weighting of skills our staff need to have and the technology we need in place to enable us to carry out our function effectively and efficiently. It also sets the context and reasoning for many of the decisions we have made during planning, and the changes you and your clients will experience over in the coming months and years. We have included excerpts from our compliance strategy in Appendix A. You may find it useful to refer to them if you have queries about some of the changes happening on the ‘road’ to building Revenue Jersey.

What we’ll deliver

Taxes and Social Security Contributions Programme (TSSC)

1. Revenue Management System (RMS) - a new computer software supporting everything we do

(On track for back office launch all tax types January 2019)

2. Online filing & immediate assessment for personal taxpayers via digital ID

(On track for January 2020)

3. Simultaneous assessment & collection of social-security contributions

(On track for March 2020)

Taxes Office Modernisation Programme (TOMP)

4. Modernise the tax law and “compliance framework”

5. Modernise the way we deliver proactive and reactive compliance activities

6. Enable inter-departmental working and service provision – e.g. one States debt-management

function using nudge techniques

7. Embed continuous improvement culture through tools such as Lean

8. Investment in Taxes Office and then Revenue Jersey skills & professionalism

Compliance-based framework

6

3. Programme aims up to 2020

General public roadmap

Below is a Roadmap that will be published for the general public within a leaflet to highlight the milestones along the journey to online personal tax filing. This is also available to download and print on gov.je/revenuejersey.

7

What we’ll deliver: priorities for phase 1

Up to 2020, we will be undertaking work on all of these areas, although we will be focussing on four key deliverables that need to be in place to allow us to move ahead with delivering more widespread change.

The introduction of our Revenue Management System (RMS) will enable the online filing of tax returns and instant receipt of assessments in many cases, freeing up staff resources to be used on other parts of our strategy.

The integration of the assessment and collection of social security contributions will allow us to develop an effective process for on-boarding staff, processes and knowledge in preparation for further revenues into Revenue Jersey. We will also introduce a modern tax law that will allow us to operate the functions of the new computer system.

Alongside our work towards these four key deliverables, we will continue to strive for improvement wherever possible, ensuring that our staff members have the right knowledge and skills to provide an excellent customer experience and work effectively with other departments within Revenue Jersey.

8

4. What you’ll see

In the public domain

There will be a number of public engagement campaigns over the next 18 months which we aim to plan with input from relevant stakeholder forum members. We anticipate that some campaigns may be more impactful if we co-deliver them with those members. The image below captures the main messages and some of the channels we will look to use to engage effectively.

Law reform proposals

As you will only be too aware, Jersey’s tax law is old and in need of comprehensive review. Over the coming years we will review all of the key aspects of Jersey’s tax-compliance framework and propose changes to the Treasury Minister which aim to improve voluntary compliance with tax obligations.

The new law will be lodged in phases, timed so that the Revenue Jersey transformation team can press ahead with designing the new revenue management IT system. Proposed measures that can only be enforced using the new system, such as the charging of interests on tax debts, will be brought forward when the IT system is ready.

9

Proposed effective 2019

The proposed law’s first phase covers the following areas:

Disclosure and use of information: Taxpayers now expect that certain personal data should be shared digitally across the SOJ where it improves a service. Current tax laws only address very specific data sharing needs, making cross-departmental working very time consuming. The new law (aligned with the new Data Protection Law, which the States Assembly approved on 16 January 2018) will enable service improvements and increased taxpayer compliance, as well as helping sustain our international reputation as top tier international finance centre.

Civil penalties: New penalties that allow the Comptroller to apply structured civil penalties on individuals and companies that make incorrect declarations, rather than having to refer cases to the criminal courts. There will be a sliding scale of penalties according to the severity of the taxpayer’s non-compliance. A person who makes an innocent error will have no penalty to pay, while penalties will increase proportionately for those being careless or deliberately seeking to avoid their tax obligations. In the most serious cases prosecution through the criminal courts will remain as the ultimate sanction.

Record-keeping requirements: To facilitate online filing and assessment, taxpayers will not always be required to submit evidence along with their tax returns. New record-keeping requirements will help ensure that evidence in support of a claim is held for a period of time. Penalties will be in place for those who do not keep documents for the required period.

Power to prevent repayments: A new ability to prevent a repayment being issued to a person, where that same person has an outstanding balance in respect of another tax-type. For example, a GST credit would not be repaid to a person who has an income tax debt.

The first phase also includes measures that are not planned to take effect until 1 January 2020, including:

Late payment interest: Interest will be payable when a person fails to fully pay their tax liability by the payment deadline date. Interest will not be payable on balances below £300.

Credit interest: Where a person overpays their tax liability, interest will be credited when that person chooses to have a repayment issued to them.

Late payment penalty interest: In addition to interest, penalty interest will be payable when a person has not paid an outstanding tax liability 3 months following the original payment due date. The penalty rate will be higher than the normal interest rate.

Other legislative changes

There are also many changes required to the taxing legislation, especially where it concerns administration and compliance. Proposed upcoming measures include:

New payment cycle for companies paying income tax: From January 2020 (law in place by January 2019) companies will be required to make two payments towards their tax liability each year, rather than one payment. The first payment will be due by 31 May and a final balancing payment by 30 November. Large companies (those with a tax liability of £500,000 or greater) will pay on 31 March and 30 September respectively.

10

Removal of requirements to submit documentary evidence: As previously stated in relation to record keeping requirements in order to facilitate the move to online filing and assessment, taxpayers will not always need to submit evidence along with their tax returns. Information in support of a return will need to be kept in case it is called on at a later date.

Effective rate calculation: Certain calculations set out in law impose restrictions that often result in issuing effective rates that are not as accurate as they could be. The Taxes Office will be able to monitor more information enabling more accurate rates being issued at the beginning of and throughout the year.

Annual ITIS filing for certain directors: Some directors currently submit ITIS returns on an ad hoc basis. Without specific filing due dates the Taxes Office will not be able to monitor compliance. This cohort of individuals will be required to choose between monthly and annual ITIS filing.

Appeals measures: In order to help manage the significant administrative burden in handling appeals, the following measures are proposed:

o Not permitting appeals in respect of an estimated amount entered on a tax return o Not permitting appeals in cases where the Comptroller has had to issue an estimated

assessment in the absence of a completed tax return

We also expect to bring forward the following proposals that are likely to take effect from 1 January 2020:

Extended filing deadlines for online filing: Taxpayers filing online will have 2 further months in which to submit their tax return.

Late filing penalties: A small increase to the late filing penalty, in line with inflation, to £300. We will also seek to impose filing penalties in respect of late employer ITIS returns.

Long overdue returns: Additional monthly penalties are proposed to incentivise those who have missed the deadline to file sooner rather than later.

Surcharge date: The move to a fixed annual surcharge deadline of midnight on 30 November.

Instalment date for personal income tax payers: To harmonise with the proposed payment dates for corporate income tax payers, the instalment date is to move to 31 May. This also provides an equal 6 months between the two payments.

11

Social security contributions proposed Orders

Though there are plans for significant legislative reform over the next few years, in the first instance there will be some Orders to allow changes that streamline tax and social security contributions procedures and definitions for instance, to facilitate an improved customer experience for employers.

Effective 2020:

One employer return for ITIS, contributions and Manpower

8 hour rule changes to a monetary value

Switch to monthly submissions for contributions

Streamlined payments

Single portal for all records

One view of all clients, taxes and contributions

When interacting with us

From 22 October 2018, the Tax Helpdesk will form part of Customer and Local Services at Philip Le Feuvre House on La Motte Street. Customers will be able to enquire about issues relating to both tax and social security contributions. Simple enquiries will be managed by Customer and Local Services staff and more complex issues will be triaged to the appropriate revenue specialist. Business tax calls will continue to be directed through to the relevant team so customers can expect our telephone service to be unchanged up to 2020. When our online service goes live in January 2020, it will offer 24/7 access to information therefore we expect that this will become the preferred method of contact.

The introduction of online tax filing in 2020 will result in fewer staff needing to manually input data and who can instead utilise their skills within other areas. These newly available staff and resources, will be used to grow a compliance and investigations team and expand our international tax team to service regulatory demands.

Better integration of international data

Revenue Jersey is being developed at a time when the amount of information available to us on our taxpayers is growing. By 2020 we will be automatically receiving information on individuals and businesses from more than 100 jurisdictions under the Common Reporting Standard, FATCA, Country by Country Reporting rules and other international frameworks. We are developing our systems and our processes to ensure that this information can be used as efficiently and effectively as possible to support our other tax assessing activities.

12

5. Behind the scenes

People programme

To achieve the programme objectives we have transformation work streams in place for all aspect of the organisation.

Staff, some of whom currently have roles that have existed unchanged in the Taxes Office for decades, will be moving into new Revenue Jersey roles. Some staff will need to develop a wide range of knowledge and skills in order to be able to perform in the new roles, so we are running a comprehensive training and development programme alongside the RMS related work. This will include putting all the required standard operating procedures in place for the new processes we are designing.

We are also taking the opportunity to put significant focus on developing a positive, professional, dynamic culture for Revenue Jersey, and to in time, make us an attractive career option for finance professionals. We will be taking the best of the Tax Office and social security contributions culture, and equipping our staff to make Revenue Jersey a great place to work.

As previously mentioned the bedrock of our compliance strategy is ongoing effective communications and engagement with our customers. We will invest in delivering a consistent easily recognisable identity and timely, relevant communications using the right channels. The main focus will be on ensuring we make it easy for them to understand and comply with their obligations.

Our transformation is a change journey involving every aspect of the organisation

13

6. Activity milestones

The Revenue Management System (RMS)

Date RJ Activity By June 2018 Staff system - requirements gathering complete

By August 2018 Public interface - initial requirements gathering complete

By Sept 2018 Employer return - requirements gathering scoping complete

By Dec 2018 Staff system - UAT complete

By Jan 2019 Staff system - user training complete

Jan/Feb 2019 Staff system - RMS taxes live for staff

By June 2019 Public interface - build complete

By Sept 2019 Staff system - data cleansing and calculation testing complete

By Sept 2019 Public system - RMS live for registration

By Jan 2020 Combined employer return live

By Jan 2020 Online filing and assessment for personal tax live

By May 2020 Other tax types (LTT, NRL, Charities) live

Policy, legislative reform and process

Date Activity or milestone Impact/actions

Oct 2018* New file format and fields in employer returns shared with payroll providers and users.

Payroll providers and employers to update their systems for reporting by 1 Jan 2020

Nov 2018 Employees sent effective rates for 1/1/2019 Per normal schedule

By Dec 2018 Existing records to be migrated to RMS and be given a unique TIN

(no need to re-register) (TIN hidden in bar code for 2019 to avoid confusion)

TBC

Dec / Jan 2019

Milestone: RMS live for staff RJ customer services suspended for period prior to go-live. TOOS will continue to accept all returns but there may be a delay in processing.

Jan 2019 Law changes take effect (page 4)

Jan 2019 New design of paper tax returns and associated guidance issued; requirements for supporting documentation will be relaxed as risk rules will become active

Jan 2019 Tax agents, companies and employers will continue to be able to submit tax returns (including ITIS and GST returns) using existing methods

No change to processes and portals you will use for 2019

14

Jan 2019 Directors meeting certain criteria paying themselves fees / salaries, can apply to file ITIS returns annually rather than monthly.

Apply for annual filing for ITIS before 15 Feb 2019, comms campaign to run from Oct 2018.

Feb 2019 onwards

For payment on account customers, the 2018 income tax assessments will include a notification of the following year’s payment on account obligations, to help customers with their financial planning

Companies will be able to prepare for the new obligation to pay their tax in two instalments from 2020. Individuals will begin getting more advanced notice on their likely future payments.

By Sep 2019 Milestone: Public system live online and balance visible (read only)

All entities can register and see their TIN. Employees will be encouraged to give their TIN to their employers.

Sep 2019 User account set up is live, including Agent and Company account set up

Businesses with Tax Agents may see you appearing as their Agents on their accounts. You will be able to assign your staff access rights. (Customer website

access design hasn’t been scoped yet, it is scheduled for later in 2018 for this part of the system)

Oct 2019 onwards

Payroll providers and employers to ensure employees’ TINs are collected for use by Jan 2020

You will need to ensure that your payroll database now has a TIN field populated with the TIN for all your employees (there may be other data that also needs to be added to the staff profile)

Oct 2019 Phased release of help resources and guides begins

As access is opened to areas of the website, guidance and help will be made available

Jan 2020 Law changes take effect (see page 4)

By Jan 2020 Milestone: Online filing and assessment live for income tax, ITIS, GST, and ISEs.

All return types to be submitted through RMS portal

Old portals to be closed for example TOOS and EMPWEB

By March 2020

Milestone: Online filing and assessment live SSC collected via RMS

All data comes through to Revenue Jersey

By May 2020

Milestone: Other tax types (including LTT and NRL) live

Nov 2020 Surcharge date becomes fixed as 30 November, to synchronise with income tax due date (i.e. assessment will not be due and payable the day after it is issued)

Minimal impact – current deadline early December, any diarised reminders / software rules may need to be updated.

15

7. Benefits for you

Our new digital services will offer a quicker, more convenient service experience that can be accessed 24/7. Our Revenue Management System will be allow customers to update personal details, view current and previous bills and print out balances statements and effective rates. Through our messaging tool, customers will be able to make an enquiry and track its progress as it is being managed by our team. Submitting tax returns online will drastically reduce the turnaround time for assessments and in many cases personal tax assessments will be received instantly. There will also be an increase in the number of online materials to help taxpayers fill in their returns.

From 2020 you’ll be able to do the following online:

Submit your tax return

Request repayments

Request that repayments are made directly to your bank account

Update income details for effective rates

View employer return

Access return data, balances and transaction records all in one place

8. What’s next

You’ll hear from us throughout 2019 in the run up to the launch of online tax filing in 2020.

In the meantime:

Visit gov.je/revenuejersey

Pick up a Revenue Jersey roadmap

Email general questions to revenuejersey@gov.je

Contact your usual representative with any technical questions

16

9. Appendices

We have recently published an abridged version of our compliance strategy which we include here for ease of reference.

A time of transition

Jersey’s tax system currently relies heavily on personal taxpayers making paper returns of income and – in the Taxes Office – on a cumbersome and highly manual process for assessing and collecting taxes. Business taxpayers have greater access to online filing capability but further modernisation is needed.

It currently costs around 0.5 pence to bring in every tax pound. With the significant investment of around £13 million, we aim to modernise Jersey’s tax system – for example, providing Online Filing & Assessment for individual taxpayers. By 2020 we expect it will cost around 0.3 pence to collect every tax pound.

We expect to run the Taxes Office and the Tax System with fewer people and that the work which our people do will change. More of our people will be undertaking risk and intelligence--led compliance activities that help ensure that everyone pays their fair share of taxes under the law.

This Strategy describes how the Taxes Office is beginning to work; and how increasingly we will work over the next five years.

Approach

Our taxes pay for the services we all enjoy as citizens of Jersey. International data indicates that the majority of taxpayers want to – and do - pay their fair share of tax: they recognise it’s the price for belonging to a safe and fair society. We aim to create an environment in which everyone can pay their taxes effortlessly. Our approach is based on the best international approaches, tailored to Jersey’s particular circumstances. Tax law is complicated and people can and do get things wrong. Some people are careless – even reckless – in declaring their income to the taxman. And a minority of people knowingly evade paying their fair share. The Taxes Office seeks to base all its work on a clear understanding of Jersey’s taxpayers, their behaviours, their needs and the risks of non-compliance they present, be that from innocent error or deliberate fraud. It has a three-pronged approach towards improving tax compliance based on HM Revenue & Customs’ “Promote; Prevent; and Respond” model. Promote. For example: promoting good design in tax systems so that it’s unavoidable - or at least very difficult - to get things wrong; promoting understanding of the tax rules through clear and simple guidance; and “nudging” careless or reckless people to take more care - so enabling customers to get it right first time. Prevent. For example, we will make it as hard as possible for people to get things wrong by providing online filing with in-built sense-checks and prompts when data bucks the norm or doesn’t look right. Respond. Where necessary, we will intervene with individual taxpayers or groups of taxpayers to correct historic mistakes or wrongdoing; and to help people get things right for the future.

17

The compliance framework: policy and law

Jersey’s tax law is old and in need of comprehensive review. Over the period to 2020 we are reviewing all of the key aspects of Jersey’s tax-compliance framework and proposing changes to the Treasury Minister which help improve people’s voluntary compliance with tax obligations.

Promoting “effortless compliance” We will improve:

Information & Communications – to give taxpayers easy access to simple and clear information about how to get their taxes right.

Nudge capabilities – to encourage people to get things right

Self-Service – over time giving people the capability to manage their personal data and tax affairs on line. In the first instance, providing Online Filing & Assessment for personal taxpayers (which we are on target to deliver in 2020)

Preventing non-compliance

Our new computer system will facilitate new online services that make it less easy for people to get things wrong and which, wherever feasible, use data we already have including for example that received from other countries about offshore income.

Responding to non-compliance: the annual compliance programme and tax campaigns

The Taxes Office’s activities to ensure compliance and to tackle error and fraud in the tax system are – and will continue to be - led by a consideration risks based on available data and intelligence. In 2019, we will aim to publish a Compliance Programme outlining some key activities we propose to undertake to test levels of compliance with tax law. This will include, where appropriate, “campaigns” of activity focused on key areas of concern or risk.

Where it makes sense to do so we will increase our focus on specific customer groups where the level of tax risk is believed to be higher.