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• PRO

  Gary RK December 30, 2015 at 5:22pm

  Small busniess owners 'better off on the dole' if proposed tax changes go through.

  Industry lobbying groups and the bosses of micro businesses fear that the cost of quarterly filing to could drive thousands of firms to the wall

  According to Daily Telegraph business article : http://www.telegraph.co.uk/finance/yourbusiness/12068240/Small-busi...

  I am surprised that some business owners do not recognise the increased effort and cost from compling with the continuing burden being placed on small business, along with being unpaid Tax collectors for HMRC, Immigration specialists (ie right to work), Counsellors etc..etc . I guess some are in for a cashflow shock...
• PRO

  Gary RK January 5, 2016 at 11:13am

  Following the Peition reaching 100,00 signatures (as detailed in an associated LJN Blog entry), The Government has formally replied to all those who responded, pending a likely debate. I've included the full text below without any newspaper editorialisation:

  Government responded:

  Making Tax Digital will not mean ‘four tax returns a year’. Quarterly updates will largely be a matter of checking data generated from record keeping software or apps and clicking ‘send’.

  These reforms will not mean that businesses have to provide the equivalent of four tax returns every year. Updating HMRC through software or apps will deliver a light-touch process, much less burdensome and time-consuming than it is today.

  At the March 2015 Budget the government committed to transform the tax system by introducing simple, secure and personalised digital tax accounts, removing the need for annual tax returns.

  At the 2015 Spending Review the government announced it would invest £1.3bn in HMRC to make this vision a reality, transforming HMRC into one of the most digitally advanced tax administrations in the world.

  One element of this vision will be asking most businesses, self-employed people and landlords to keep track of their tax affairs digitally and update HMRC at least quarterly via their digital tax account.

  Many taxpayers have told HMRC that they want more certainty over their tax bill, and don’t want to wait until the end of the year, or even longer, before knowing where they stand with their taxes.

  We also estimate that £6.5bn in tax goes unpaid every year because of mistakes made when filling in tax returns. These reforms will make it easier for taxpayers to maintain accurate and up-to-date tax affairs, reducing the scope for error.

  With businesses keeping track of their tax affairs digitally, quarterly updates will be fundamentally different from filling out an annual tax return in a number of crucial respects:

  • Quarterly updates will not involve all the complexity of a full tax return. The updates will be generated from existing digital business records. In most cases, little or no further entry of information will be needed. It will be much quicker to complete than the current tax return.
  • As part of the process the business owner or individual will receive a developing in-year picture of their tax position, helping people have greater certainty about what they owe, allowing them to plan their finances more effectively. This differs from the current system where many taxpayers are caught out by their tax bill when it finally arrives.
  • In-year updates will not be subject to the same sanctions for lateness or inaccuracies as apply now to the year-end position. HMRC will consult during 2016 on what sanctions might be appropriate for a more digital tax administration.

  The government has already announced that these measures will not apply to individuals in employment or pensioners, unless they have secondary incomes of more than £10,000 per year from self-employment or property.

  The reforms will rely on businesses, self-employed people and landlords using software or apps that can connect securely to their digital tax account. The government will ensure that free products are available. The Gov.UK service will signpost taxpayers to the right product, with clear HMRC guidance about how to choose software.

  HMRC will ensure support is available for people to get online if they need it. We will also provide alternatives for those who genuinely cannot use digital tools, like telephone filing. This will build on our Needs Extra Support service, which has gone from strength to strength in helping more vulnerable customers.

  We’re introducing these reforms gradually. We’ve been in discussion with stakeholders since March 2015 and will be consulting on the details of the proposals throughout 2016.

  We will use volunteers to test the new tools and processes and give us feedback. Quarterly updates will be introduced for some from 2018, and will be phased in fully by 2020, giving taxpayers time to adapt.

  We want to work with all stakeholders to ensure these changes work for them. For more information about the proposed reforms please search for ‘Making Tax Digital’ on Gov.UK or use the following link:

  https://www.gov.uk/government/publications/making-tax-digital

  HMRC
• PRO Supplier

  Helen Gazeley January 5, 2016 at 11:28am

  I'd just posted the response when Gary's post came up. There's a bit more at the bottom of the government response (quoted below) that tells you about the petitions committee, if you're interested.

  Click this link to view the response online:

  https://petition.parliament.uk/petitions/115895?reveal_response=yes

  This petition has over 100,000 signatures. The Petitions Committee will consider it for a debate. They can also gather further evidence and press the government for action.

  The Committee is made up of 11 MPs, from political parties in government and in opposition. It is entirely independent of the Government. Find out more about the Committee: https://petition.parliament.uk/help#petitions-committee

  Thanks,
  The Petitions team
  UK Government and Parliament

  Personally, as someone who's gone back to using paper and pencil for her accounts because she finds it so much quicker, I think the idea of filling in someone else's choice of software sounds like hell. I also know that my accountant has saved me money and I wonder if part of this scheme is to discourage the use of accountants for this very reason.

  With both government and businesses both constantly shifting work onto the shoulders of the people they're supposed to be serving (supposedly for our convenience, but actually in order to save money), I'm deeply cynical about just how easy and straightforward this will be. I also wonder if the software is likely to be any more successful than the huge software projects the government has tried to implement in other areas.

  However, obviously I'm being a bit of a Job's comforter here and a fair number of you regard this quite positively, so perhaps you're right and it won't be so bad. At least it might now come up for debate in Parliament and we might learn more of the pros and cons. 
  • PRO

    Gary RK > Helen Gazeley January 5, 2016 at 11:41am

    Great minds think alike :)

    Small businesses have seen a massive move of policing legislattion from the Government to the shoulders of SME's.

    We are currently 'Unpaid Tax Collectors, 'Social Workers', 'Immigration Specialists',' Pension Providers' etc with increasing amounts of red tape tieing up businesses and diverting them from their core activitties.

    Still, it gives the MP's more time to spend their salaries and complete Expense forms ;)
    • PRO Supplier

      Helen Gazeley > Gary RK January 5, 2016 at 12:06pm

      Couldn't agree more. It's just another way of increasing taxes, except it's our time that's taxed, rather than our actual income.
  • 

    Russ Francis > Helen Gazeley January 5, 2016 at 5:10pm

    I'm with you on this one Helen, it goes to show how out of touch they are on the realities of running a small business as a one (wo)man band.  They say "Quarterly updates will largely be a matter of checking data generated from record keeping software or apps and clicking ‘send’."  Not in my case, and I imagine I'm not unique in that respect.  With my turnover at present there is no need or business case for adopting the likes of Quickbooks, Jobber etc.

    My "books" are exactly that - hand written books, albeit hewn into shape on Excel once a year for the tax return.  I can't see any free apps being any benefit to me, just extra overhead and duplicated effort.  Simply don't have the time during peak summer season to mess about with accounts.

    The govt say "• In-year updates will not be subject to the same sanctions for lateness or inaccuracies as apply now to the year-end position. HMRC will consult during 2016 on what sanctions might be appropriate for a more digital tax administration.", I'm sorry but I don't trust a damn word the govt say.  They will be rubbing their hands in glee at the opportunity of an extra three deadlines a year to wallop out the fines.
• PRO

  Geoffrey King January 5, 2016 at 1:20pm

  I read the govt reply and it made little sense of how that would work, many places around here barely have a telephone line let alone digital capabilities.  As we are a partnership, we have to buy each year special software to file the tax return from https://www.taxcalc.com/, one of several providers, i.e £60 approx.  I do the accounts using Excel, i don't understand how these could be used to submit info to 'our' digital account, but more importantly many businesses locally are pen & ink.  How will that work then?!
  • PRO

    Gary RK > Geoffrey King January 5, 2016 at 1:25pm

    Like you, I can't see how this will materialise (and suggest that HMRC don't yet either..) and be actioned without increased costs to small businesses.

    I think that those small business that can't see the issues, don't yet understand the issues, impacts and what comes next......
    • PRO

      Richard Gadsby > Gary RK January 5, 2016 at 1:37pm

      What comes next?
      • PRO

        Gary RK > Richard Gadsby January 5, 2016 at 1:43pm

        One can speculate and draw parallels from existing legislation.