As the dust settles in accountants’ offices after the annual January rush to meet the filing deadline for their clients’ Self Assessment tax returns, it is a suitable time to look ahead to the new digital tax accounts that were first announced in the March 2015 budget.
The Government have set out plans to modernise the current tax system, making the current format of returns a thing of the past. Instead there will be a digital online account for millions of individuals and businesses, where all tax affairs can be viewed, giving an up to date tax position at any time. The thought process behind this is to ensure that people can stay on top of their tax affairs rather than having a sudden liability upon production of the year end return.
Concerns have been raised over the additional burden of reporting, with initial details revealing that the online accounts should be updated “at least quarterly”. With the promise of penalties for those who fail to comply, the thought of this will send shudders down the spine of the less organised amongst us.
Further concerns by many involve thoughts of what HMRC are planning to do with the additional wealth of information that they will have at their disposal. Few could argue that the new plans are not considerably more intensive and possibly intrusive than those currently in place, but whether this leads to an increase in Tax Enquiries remains to be seen.
Enough people have been willing to make their thoughts known on the subject, with a Parliamentary debate having been necessary on January 26, following 110,300 signatures on an online petition against the plans. It seems that this will not be enough to dampen proceedings though, with the Government response stating that: “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’.”
As we await further details throughout 2016 following consultation, it remains to be seen whether their “Bold vision for a new, modern tax system, which will make it easier for all taxpayers” can live up to its own billing, especially in the eyes of those not currently keeping regular management accounts on computerised systems, and those none too excited at the prospect of making more regular tax payments.