Member Article

The road to digital tax return becomes clearer

The devil is in the detail when it comes to the so-called “end of the tax return” by 2020, according to national audit, tax and advisory firm Crowe Clark Whitehill.

But that detail, it notes, is getting clearer.

The comments follow a series of consultation documents from HMRC explaining its vision for the future.

Self-employed people and landlords will be required to use software or apps to keep their business records. Most will also have to update HMRC quarterly, or more frequently if they wish.

The reforms will not apply to unincorporated businesses and landlords with an annual income of below £10,000.

Rebecca Durrant, tax partner in Crowe’s Manchester office, said: “The key to the success of the tax simplification agenda is in providing a simple and flexible tax system for the majority of tax payers, who are trying to do the right thing. We want to make certain that in aiming for a digital tax system, we do not simply replace one rigid tax system for another.

“We welcome the prospect of simplifying the way UK tax is calculated, managed, and paid, particularly for the UK’s many small and family-owned businesses, which are so critical to our economy.

“These are under increasing pressure as a result of ever more complex compliance requirements. We believe the costs of tax compliance are disproportionate to their profits.”

Six consultation documents have been released along with a summary, Making Tax Digital for Business – An overview for small businesses, the self-employed and smaller landlords.

It builds on a Making Tax Digital Roadmap issued in December last year.

Mrs Durrant went on: “The ideas are ambitious and, whilst they will involve some radical changes to how taxpayers and their agents have managed their tax affairs for many years, they have been largely welcomed – in principle.

“In practice, as with most things, the devil is in the detail and, with the publication of these consultation documents, we are starting to get an idea of the detail. HMRC’s view is that, under the new system, it will feel like paying a single tax. We are interested to see if taxpayers share this view once they have more visibility on the total amount of tax they pay each year.”

It has been estimated that, given the various concessions, more than half of the country’s 5.4 million small businesses will not be affected by quarterly tax reporting.

The consultations ran until 7 November 2016.

This was posted in Bdaily's Members' News section by Andy Skinner .