The chancellor announced that small businesses and ten million individuals will no longer need to file tax returns.
This will rely on:
the successful and secure rollout of digital accounts for taxpayers
the correct information being in these accounts
all information being complete
businesses keeping their records up-to-date and these records being accurate, with distinctions between areas like capital and revenue being clear.
The digitalisation aspect of the proposal – linking business accounting software to a digital account by 2020 – is ambitious and there is no clear proposal as to how this will be achieved.
In the document Making tax easier; the end of the tax return the government states ‘their accounting software will be able to feed data straight into their digital tax account, so most businesses will simply log-in to check their details with no need to send an annual return.’
We are concerned at the potential tax loss to the exchequer, the risk of continual defaulters and also the fact that businesses and individuals may end up paying more tax than is due.
We would like to hear what you think on the proposal. Questions for you to consider include:
is the change a simplification – for your clients, for HMRC, for you?
is it likely to result in more or less work for you?
in your experience will HMRC systems and software be able to cope?
are you concerned over certain groups or types of clients being able to cope with the change?
is the information you receive from clients complete, up-to date and accurate?
in your opinion who will benefit from this policy - who will save time and money:
We had an amazing response to our first call for comments, with many valuable comments received within 24 hours. These highlighted:
HMRC's poor track record and the fact it is under-resourced
the time spent sorting coding notices when HMRC already has the information
that the tax take could be put at risk
the naïve nature of the report and its unrealistic time frame
the burden the proposal will place on small businesses and that costs will increase for everyone.
We are sharing these (anonymously) both internally and externally as we seek to influence this ongoing issue and ensure the best outcome for practitioners. We continue to welcome the views of our practitioners and ask you to respond via the email address above.