Plan to accelerate tax payments

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This is going to affect all businesses that pay tax under self assessment, including companies.

HMRC is consulting on simpler tax payments. Let’s be clear; “simpler” means more frequent payments, which are paid at a time closer to the period in which the income is received.

There are no firm proposals on exactly how many extra tax payments will be required, and when the new system will come into effect, as this is a first-stage discussion paper. There will be discussion events held around the country (see below), open to any accountants in practice and their business clients. You need to book a place at those events by email, and there may be more events arranged in February and early March.

Consultation events:

Date Day Location
29/01/2016 Friday London
01/02/2016 Monday Bristol
02/02/2016 Tuesday Exeter
03/02/2016 Wednesday Cardiff
04/02/2016 Thursday Newcastle
05/02/2016 Friday London
05/02/2016 Friday Nottingham
08/02/2016 Monday Manchester
08/02/2016 Monday Belfast
09/02/2016 Tuesday Leeds
10/02/2016 Wednesday Glasgow
01/02/2016 Thursday Edinburgh
12/02/2016 Friday Birmingham
19/02/2016 Friday London

When George Osborne announced the end of the tax return, the AccountingWEB community were quick to uncover the potential benefits for the government. Some predicted that real-time tax payments for the self-employed would be a bi-product of the proposed quarterly online reporting. And so it appears to be.

The discussion paper makes it clear that accelerated tax payments will apply to corporation tax, VAT and self-assessed income tax, including Class 4 NIC. Class 2 NIC is to be merged into class 4 sometime soon, according to a current consultation paper. It hints that where a business pays several taxes (e.g. CT and VAT), the payment dates for those taxes may be aligned.

That would mean quarterly payments for CT for all companies. This is a logical extension of quarterly reporting of business turnover and expenses, glossing over the need to make adjustments for accruals, prepayments and disallowable expenses.

Companies who already pay CT by quarterly instalments won’t be affected, as they already pay corporation tax within the accounting period in which the profits are made. Also, companies with profits of £20m or more will see their CT quarterly instalments advance by four months for accounting periods starting on and after 1 April 2017.

HMRC justifies the acceleration in tax payments as a way to reduce the burden on taxpayers, as (they argue) it will allow easier off-set of construction industry scheme deductions against other tax liabilities. HMRC also cites research that concludes small businesses would prefer to pay tax in smaller amounts more regularly. The “burden” of companies moving from making a single CT payment nine months after the year end, to quarterly payments starting within the accounting period would also be lifted.    

I believe most small businesses will see quarterly tax payments as an increased burden, not a decrease!

Please get involved in this discussion with HMRC. Attend one of the consultation events if you can, or post your views below.

Rebecca Cave
Tax Writer
Taxwriter Ltd
Columnist
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26th Jan 2016 12:14

Don't play this game

This is dishonest - it's not a consultation.

HMRC will run these meetings and then ignore everything raised by accountants. The purpose of these meetings is for someone further down the road to stand up in Parliament and say "we consulted widely with accountants" - and then do exactly what they wanted in the first place.

Boycott the meetings and write to your MP instead.

Or - insist that the minutes of EVERY meeting are published in the public domain. Better still - take your own minutes of the meeting and publish them yourself.

Sorry to rant but this dishonesty makes me cross.

 

 

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By deg2yq
28th Jan 2016 13:07

I support Hmrc on this
Why are you guys complaining ?Sometimes O think some people are programmed to complain about everything HMRC does as a knee jerk. I disagree with HMRC 75% of the time but I support this particular initiative.

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28th Jan 2016 13:34

I'm sold

deg2yq wrote:
Why are you guys complaining ?Sometimes O think some people are programmed to complain about everything HMRC does as a knee jerk. I disagree with HMRC 75% of the time but I support this particular initiative.

Now that you've put such a detailed and compelling argument forward I don't see what all the accumulated experience and knowledge of everyone on this forum were even thinking, doubting HMRC in the first place now just seems crazy. Be sure to let us know what other HMRC proposals are within your 25% and we'll all just blindly support you.

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28th Jan 2016 18:37

Worrying!

Sheepy306 wrote:

deg2yq wrote:
Why are you guys complaining ?Sometimes O think some people are programmed to complain about everything HMRC does as a knee jerk. I disagree with HMRC 75% of the time but I support this particular initiative.

Now that you've put such a detailed and compelling argument forward I don't see what all the accumulated experience and knowledge of everyone on this forum were even thinking, doubting HMRC in the first place now just seems crazy. Be sure to let us know what other HMRC proposals are within your 25% and we'll all just blindly support you.

Well, sheepy, the worrying aspect is the poster gained one uptick!

 

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By mwngiol
26th Jan 2016 13:43

Initial thought

Would this mean the end of Payments on Account? If so then 4 annual payments rather than 2 isn't all that bad or burdensome. The actual quarterly reporting on the other hand...

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26th Jan 2016 14:38

My guess

I suspect it will be like the TOMS for VAT. Basically 4 payments on account followed by an adjustment 

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26th Jan 2016 16:37

It will result in increased accountancy fees

and smaller accountancy practices going out of business and either 1) turning their hand to another business or 2) having to claim benefits, tax credits or universal credit - Result Austerity forever!

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26th Jan 2016 17:27

Note on the research referred to above

The research consisted of just 40 interviews with SMEs, 9 of which were sole traders, so not a great sample size.

Also the actual interviews with SMEs found "Reactions towards more frequent reporting were predominantly negative, due to associations with administrative burden and the sense it was for HMRC, rather than the business. Most saw no or few obvious benefits...."

But the HMRC discussion document says:  "13: We know from research and stakeholder engagement that many taxpayers see advantages from paying smaller amounts of tax more regularly. "

I am grateful to @StrongerInNos for spotting this

 

Un

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27th Jan 2016 12:47

Dishonesty is dreadful!

It is sad to see a once revered institution reduced to lies, dishonesty  and deceit

YES , I mean you HM Revenue & Customs..........

Do not take part in this Kaffaesque farce , this Machevelian plot.

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27th Jan 2016 10:54

flawed on concept
Supposed to be a tax on profits, NOT forecasted profits.

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27th Jan 2016 11:06

I could be wrong but

Once you have got 12 months taxes in advance after that with all things being equal, the benefits / advantages of the scheme to the Government have gone.

 

I am just listening to  

 

http://parliamentlive.tv/Event/Index/33734d0f-5461-4fa4-9c1c-3d0db3798d55

 

I was amazed how clued up some MP's are  

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27th Jan 2016 11:16

benefits?
The nature of trade is somewhat different to employment. Most small businesses fail because they run out of cash, with hmrc as the plaintiff. This will just increase that failure. With consequent reduction in tax revenues. If anything it shows a serious misunderstanding of what small business is all about.

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27th Jan 2016 11:59

precisely

listerramjet wrote:
The nature of trade is somewhat different to employment. Most small businesses fail because they run out of cash, with hmrc as the plaintiff. This will just increase that failure. With consequent reduction in tax revenues. If anything it shows a serious misunderstanding of what small business is all about.

Yep

It will be the death nell for many small businesses. That can be the only plan here.

All of this government's strategy is anti small business.

You may as well vote labour at least the benefits cheque will be larger.

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27th Jan 2016 11:28

Look at the dates!

Who in HMRC, who understands our work, would schedule these meetings at the end of January and the beginning of February? How out of touch can they be?

I agree, this is likely to be a sham, put in place because these days if an official body does not 'consult', their decisions can be challenged by Judicial Review.

 

..... and we can see the REAL purpose of introducing Quarterly Tax Returns, as we suspected.

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29th Jan 2016 08:52

Thoughts

davidross wrote:

Who in HMRC, who understands our work, would schedule these meetings at the end of January and the beginning of February? How out of touch can they be?

I agree, this is likely to be a sham, put in place because these days if an official body does not 'consult', their decisions can be challenged by Judicial Review.

 

..... and we can see the REAL purpose of introducing Quarterly Tax Returns, as we suspected.

Davidross is right they are totally out of touch, but there timetable smacks of getting it all out of the way before Budget announcement.

I think most accountants will be catching up on non tax work or taking time off.

My local meeting is in Newcastle but  I will miss as away skiing tomorrow.  I am trying to get on one the following week, but not keen on Belfast!

Based on past form HMRC will smile nicely, say that they will take the concerns away and do nothing. The decisions have already been taken.

However, I feel that as a profession we have to do all that we can to try and prevent the quarterly reporting madness that they are trying to push onto small business.

 

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By cedney
27th Jan 2016 11:41

Very ill thought out

This is all well and good, but in the absence of legislation to:

a) force banks to lend; and

b) force big businesses to pay on time

All that will happen is many SME's will run out of funds.  So best case the recovery falters, worst case there will be a spate of insolvencies and of course, the medium term tax revenue stream will reduce.

 

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By codling
27th Jan 2016 11:38

Agenda

This has been on the government/HMRC agenda for some time and is the next stage to bringing in a sort of PAYE for all.

Just how little government (and HMRC) knows about small business is scandalous. I work in an area with lots of holiday based businesses where there are reasonable profits in the summer months but losses in the winter. How will that work if you have paid on the good times and need a refund in the bad times?

 

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27th Jan 2016 11:56

Never mind

quarterly accounts this will become a monthly return on RTI with a tax bill to be paid by the 19th. Of that there is no doubt in my mind.

I've just gone through the debate on 25th and Mr Gauke hasn't got a clue. It's like he's reading off an autocue.

Let's take this to it's conclusion. In order to comply SME's will have to pay for the service which means their prices will go up, which in turn mean sales down, profit down, oh tax bill down. Less money for HMRC. The alternative is that there won't be many SME's left. So the big boys can charge what they like and pay whatever tax they like.

Message to this government. You are going the right way to let the EU run our country via Mr Corbyn and the SNP, destroying middle England on the way.

 

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27th Jan 2016 12:56

I'd rather you kept politics out of this johnjenkins. You seem to have forgotten you (England) were desperate for Scotland to stay because we had so much to offer you (sorry, Britain) and if that is by allowing a more effective opposition in the UK parliament then that is what you have

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By Elvis11
27th Jan 2016 13:46

Hang on a minute

ngm1scot wrote:

I'd rather you kept politics out of this johnjenkins. You seem to have forgotten you (England) were desperate for Scotland to stay because we had so much to offer you (sorry, Britain) and if that is by allowing a more effective opposition in the UK parliament then that is what you have

Desperate for Scotland to stay? Don't flatter yourself. As an Englishman, I would have loved to see Scotland go it alone. Never understood why the English didn't get to vote on it.

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27th Jan 2016 12:00

Dates

Cant really afford the time but have taken two minutes out to post this comment. Leaving aside the laughable spin that the proposals will relieve the burden on businesses, I fully agree with earlier comment about choice of date. It shows  a complete lack of understanding even by HMRC woefully inadequate comprehension of the tax profession - or a complete utter disregard for it . Probably the latter. Who on earth is going to turn up on 29th January? And what do they think we do in first week of February. For most small practitioners we have a backlog of non tax work to catch up on. 

I have been in the profession for 30 years now and the gap between HMRC and accountants has never been wider.  

       

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By Tri622
27th Jan 2016 12:01

Email contact details

Could someone let me know what email address we would need to book on with ?  

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27th Jan 2016 12:04

Limited company and continual insolvencies are the way to go.

It has worked very succesfully for the criminal element for years. Companies house even endorse this behaviour by striking off as fast as they can absolving companies and directors of all tax liabilities anyway.

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By Exector
27th Jan 2016 12:06

@codling

Not in favour of the proposals and agree this is just for cash flow benefits for HMRC , nothing to do with the tax-paying customers, however I would say that the  current CT QP system provides for cos to reclaim  tax paid in earlier quarters if the latest profit projections show that overpayments have been made, so the impact wouldn't be so bad if this adopted for any PT QP arrangements.

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27th Jan 2016 12:09

Government has no money

 We keep being bombarded with these with these so called improvements .

Offset and  or repayment of CIS taxes is  becoming a  frustrating and a  time consuming joke .

SA repayments transferred  back to original source account / card despite what is requested  on the return .

Ever greater  difficulty to  get contact with any HMRC departments .

No face to face access for the public anywhere in the UK .

PAYE code adjustments made without explanation or basis of fact  to grab more taxes upfront.

Timescales on response to any written submission .

No department seems to want to deal with agents .

All they want is a pay at the point of sale.

Why not raise the VAT % and we can all just go home .

As a new business registers  might as well  just set up a direct debit  pay as to go TAXES

 

 

 

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27th Jan 2016 12:12

the answer is

lets just pay some tax a bit earlier. Give DG and GO a knighthood for increasing tax and move them on and get some people in who understand accounting, small businesses and have a genuine interest in helping them... and who don't keep hindering us and increasing costs because you think it is a great idea when told it is not. It is counter productive. Sure good book-keeping reduces the risk of error, but maybe it's the expenses people lose, not the income - maybe tax is over paid!  (Quarterly returns are not needed still). Debates between some that understand accounting (the minority - but there were some great points made in the debate by those that understand) and others who do not are so frustrating to us (me). Common sense anyone?

I will be at consultations and will make myself heard.

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27th Jan 2016 12:15

Deficit reduction

Bring forward tax payments and Hey Presto the deficit is reduced just in time for the next general election.  GO will be trumpeting his initial success from the rooftops...  the aftermath of destroyed cashflow for small businesses can wait until after he is safely in No10.

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27th Jan 2016 12:18

Quarterly tax payment , fine, but

I don't have a problem with quarterly tax payments per se, if they are based on last year's figures with an adjustment date and the ability to reduce, etc.  But their thinking of aligning all payment dates is a bad one- I don't want to face a CT bill AND a VAT bill on the same date.

Having one tax account for all taxes would certainly help, like the Irish have had for years, with automatic set off of overpaid (say CIS) tax against other liabilities.

It's the quarterly reporting I have a huge issue with.  HMRC seem to think people can just 'press a button' and the tax computations are all done for the self employed.

What's next? Tax on turnover and ignore all expenses? (Like they are doing on properties and interest payments..).

Not sure who is driving all these changes but they all seem to be taking principles that might work for large companies with dedicated accounts departments and trying to bolt them on to micro businesses.  I wonder who the consultants are on these projects and which top firm they came from...

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27th Jan 2016 12:30

Really need to abolish late payers too and bad debts.

or perhaps the government could arrange a factoring charge so they could lend us the money to pay the tax bill out of money not received yet.

Invest your money in the future? forget it, you don't have one.

Perhaps we just need to accept that this is the way Europe works now and just survive the best you can by whatever means required. at least were not off to the Gas Chambers. Yet.

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27th Jan 2016 12:37

What Can We Do?

Time and time again HMRC introduce daft and often unworkable ideas without properly listening or taking any notice.  They don't listen or take any notice of the profession.  They don't listen or take any notice of their chief executive.  They don't listen or take any notice of the public accounts committee.  No-one.  How can we make them listen and take notice?

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By norstar
27th Jan 2016 12:41

Will refunds follow suit?

When I see HMRC playing fair on refunds to taxpayers, then we can talk Turkey about getting us all to pay quarterly.

However when HMRC knowingly and wantonly hold on to taxpayer refunds for CIS, PAYE, Self Assessment etc for six months or more despite being chased several times, I have no faith in the system.

In my opinion, they are likely to accelerate the payments on account over four quarters, then hold onto any subsequent refund with their grubby little mitts until the taxpayer squeels enough to get it repaid - eventually.

But they know damn well that many businesses who overpay - whether it be POA, DLA tax, PAYE etc, don't chase it up and forget about it.

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By SAYMA
27th Jan 2016 13:38

How would this work for mortgage applications

On the face of it I would not have any objection to paying tax quarterly but only if based on previous year's accounts with an annual adjustment.  I don't think any of my very small sole trader clients would object to that but if the payments were aligned with their VAT periods this could seriously affect cashflow.

However, if the purpose of this is to do away with the annual tax return does this also mean the abolition of annual accounts?  If so, how will this work for mortgage applications where the lender asks for annual accounts and has extreme difficulty in coping with accounts which are either shorter or longer than the annual norm?

 

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27th Jan 2016 13:45

@ngm

"keep politics out of it". That is a gem. Wrong Young person. England didn't give two hoots if Scotland went independent. In fact I wish they had, they would then know what they were missing. No, it was the politicians who wanted Scotland to stay and just look how far away they are from public opinion. We didn't have much of a choice at the last election as we couldn't have a coalition (not on the ballot paper). So it was either your lot ruling through Ed and Ed or DC and GO. At the moment we haven't got much of a choice at the next election.

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By lme
27th Jan 2016 13:55

In our interests or our clients?

Do accountants think this is so terrible because:

1. It will be less work for us

2. It will be more work for our clients or

3. There will be more inaccuracies e.g. no accruals etc

1. is not a valid argument. Sorry. If small businesses can save money on accountants fees, that is more money to spend on other things e.g. more valuable advice from their accountants, in their advisry role (we can scarcely say the typical year end job which takes place months after the year end, is very valuable).

2. If they pay VAT quarterly, I would expect it to be simple to pay SA tax at the same time, similarly, if they bring their records up to date for VAT that will be there more or less for SA. So, if HMRC take tax at the appropriate rate (net of personal allowance) it should be roughly right and might be EASIER for clients to manage the quarterly cash flow that way.

3. I am concerned about 3. However, I do wonder if HMRC are NOT! Accruals tend to reverse and timing differences flow through. To tax quarterly without accurals adjustments is inconsistent with accounting standards. But perhaps HMRC can see a way to get all the tax that is due on a cash basis that is simpler for everyone, and gets roughly the right amount in at roughly the right time. I think they may have a point. This could be a big saving for small businesses. The move to online has probably reduced timing differences for many of the smallest businesses in any case.

In summary, I wonder if HMRC are thinking ahead of accountants on this issue and if they might actually be right, that it will be easier for small businesses and worth the sacrifice of accruals accounting.

 

 

 

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27th Jan 2016 14:15

For me

lme wrote:

Do accountants think this is so terrible because:

1. It will be less work for us

2. It will be more work for our clients or

3. There will be more inaccuracies e.g. no accruals etc

1. is not a valid argument. Sorry. If small businesses can save money on accountants fees, that is more money to spend on other things e.g. more valuable advice from their accountants, in their advisry role (we can scarcely say the typical year end job which takes place months after the year end, is very valuable).

2. If they pay VAT quarterly, I would expect it to be simple to pay SA tax at the same time, similarly, if they bring their records up to date for VAT that will be there more or less for SA. So, if HMRC take tax at the appropriate rate (net of personal allowance) it should be roughly right and might be EASIER for clients to manage the quarterly cash flow that way.

3. I am concerned about 3. However, I do wonder if HMRC are NOT! Accruals tend to reverse and timing differences flow through. To tax quarterly without accurals adjustments is inconsistent with accounting standards. But perhaps HMRC can see a way to get all the tax that is due on a cash basis that is simpler for everyone, and gets roughly the right amount in at roughly the right time. I think they may have a point. This could be a big saving for small businesses. The move to online has probably reduced timing differences for many of the smallest businesses in any case.

In summary, I wonder if HMRC are thinking ahead of accountants on this issue and if they might actually be right, that it will be easier for small businesses and worth the sacrifice of accruals accounting.

 

for me it's more, lets wreck the economy because we don't understand it I object to. Businesses need proper accounting records so they know whether they are being succesful or not and to make proper decisions that will benefit the economy as a whole. Dumbing everthing down to sub idiot level will only result in an unfair tax system, disencourage investment, dishearten the entrepreneur and generally accelerate the demise of the Uk economy. We are fighting for survival here. These people are not acting in the country's best interests. lower taxation and less regulation has been shown to increase the tax take and the economy whilst improving the wealth and standards of living of the subjects. HK and california being examples.

 

 

 

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27th Jan 2016 14:31

A nightmare for small businesses

This is simply four tax returns rather than one (increased accountancy fees), and paying tax earlier (more strain on cashflow).  I can't how that could be beneficial for any small business.

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27th Jan 2016 15:03

@Ime

You really shouldn't be in practice because you obviously have no idea of what the small business (and let's be quite clear, it's the small business HMRC are after) needs are. Please tell me how doing quarterly income and expenditure is saving time as opposed to once a year. The rest is just cashflow for HMRC. If they want money quicker all they need do is set up monthly on account payments as opposed to 6 monthly (but on figures that can be adjusted).

It does seem wierd that 99.9% of Accountants feel the same way. No doubt 99.9% of business feel the same.

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By deg2yq
29th Jan 2016 18:29

show some class
IME expressed an opinion the fact that it is different to your strongly held one does not give you the right to shut down her right to free speech and personally insult her professional competence

That is very disappointing

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By Briar
27th Jan 2016 15:04

I shall be on holiday!

It's very sneaky arranging meetings for early January and February and shows just how out of touch HMRC are. Or, are they intending to say that as not many accountants turned up at the meetings this must mean that accountants are in agreement with the proposals or, at least couldn't be bothered to comment. After a heavy workload in January and having flooded in December, my wife would like me to take some time off in February - and I shall be. 

Working Together? - Bullshit!

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27th Jan 2016 15:09

@Ime

Oh yes I forgot "HMRC thinking ahead of Accountants" That must be the staement of the year.They just got rid of their boss cos she was useless. Google & Co must be laughing all the way to the bank. Still no worry as long as there are small busines about we will accept and pay fo this crap.

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27th Jan 2016 16:32

To Make This Work

HMRC will have to cancel the core concept of the SA303!

Otherwise I can see shedloads of these being filed even when expected profits are higher, on the basis of err honest mistake!

HMRC's next step will be to demand mythical tax...

All of which will simply drive increasing numbers into the black economy and/or, as already suggested, there will be massive growth in here today gone tomorrow Ltd Companies.

What government and HMRC ALWAYS ignore and forget is that SMEs generate circa 48% of the UK's wealth and a similar level of employment.

As John suggests, government seems to adore the Googles, Starbucks, Amazons, Vodaphones of this country: hopefully they will all be able to create sufficient new employment for all those unemployed driven out of business.

 

 

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By Nemesis
27th Jan 2016 19:49

I love my business: I don't want to think about tax. Integrating tax into the everyday running of a business can only be a good thing.

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27th Jan 2016 20:41

How Worrying!

Nemesis wrote:

I love my business: I don't want to think about tax. Integrating tax into the everyday running of a business can only be a good thing.

I particularly loved this bit!

Quote:
I don't want to think about tax.

Really?

Then actually, youve missed the core aspect of investing in and operating a business!

Sadly, you must think about tax!

Since, structuring your business around sensible and legitimate tax planning is a critical strategic aspect of financial success.

Unless, of course, you adore the Government and its total mismanagement of this nation state's socio-economic and fiscal affairs equally to your sweat, risk taking and work.

More worrying, to me, is you gained one uptick...

 

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By a_q
27th Jan 2016 22:30

Make this work for you

With quarterly returns it could be a fairly simple matter to make your first quarter of each year return a whopping loss, by booking sales to later in the year.

Then you can claw back your previously paid CT from HMRC which can then sit in the bank as useful cashflow, or to offset any borrowing, for the rest of the year.

By the time the final return happens, the books are balanced and equilibrium is restored.

Simples!

 

 

 

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By Robbas
28th Jan 2016 08:58

HMRC as usual

Yet again HMRC and The Government have proved they have absolutely no idea how small business's work. Very few have an even turnover or profit stream even if over a 12 month period the figures are consistent. Investments in assets are often made from a surplus from the previous few months and often when the annual position can be seen so paying too much tax in advance will reduce investment by small business.

This may well be the death knoll for the sole practitioner who already has been burdened with coping with RTI and auto-enrol pensions in the last couple of years. The rule of diminishing returns.

All HMRC have to do is make it possible to make regular payments into a tax account rather than the current twice yearly payments now made. With low interest rates I'm sure many business's would set up a monthly payment to HMRC based on their own estimate of tax due and then pay any balance as appropriate. Much better than paying too much and waiting in vain for HMRC to decide when they can be bothered to make a repayment

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28th Jan 2016 10:16

Let's make it simple

Robbas wrote:

All HMRC have to do is make it possible to make regular payments into a tax account rather than the current twice yearly payments now made.

This is already possible.  Anyone can put money into their self-assessment account any time they like. 

Come to think of it, perhaps we could suggest that clients decide how much to pay on account each month without the bother of producing supporting documents which HMRC will not have time to look at anyway.

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28th Jan 2016 18:45

Presuming, of course.......

Huw Williams wrote:

Robbas wrote:

All HMRC have to do is make it possible to make regular payments into a tax account rather than the current twice yearly payments now made.

This is already possible.  Anyone can put money into their self-assessment account any time they like. 

Come to think of it, perhaps we could suggest that clients decide how much to pay on account each month without the bother of producing supporting documents which HMRC will not have time to look at anyway.

Nice if:

All their clients/customers have paid and they not only have been paid, but all major VAT invoices have been paid, too...

Most SMEs, however, operate on credit-debit balances, since banks et al will not support them sufficiently.

Ergo, they are all funding each other's sales ledgers.

Which is all fine and dandy: until one goes, as our US cousins say so graphically "Down the Tubes". And the VAT output tax cannot legitimately be classed as a Bad Debt, until an IP declares the final dividend. Which can take two years plus.

Meanwhile, the poor VAT registered trader has to fund the VAT which they have not actually collected. Of course, they could issue a credit note and immediately write off the debt. Then, however, they cannot participate in the winding up.

In 2014 I had one corporate go, owing my practice £8K...

 

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29th Jan 2016 16:29

Debt - that's a good thing isn't it?

Michael C Feltham wrote:

Most SMEs, however, operate on credit-debit balances, since banks et al will not support them sufficiently.

Ergo, they are all funding each other's sales ledgers.

Which is all fine and dandy: until one goes, as our US cousins say so graphically "Down the Tubes".

 

 

Sounds like a description of the "banking" crisis back in 2008.  One US cousin went "down the tubes" and the rest is history

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28th Jan 2016 11:23

Hmmm

I need to be paid faster...I have no money...

I am entitled to it anyway...I just cant wait

 

Heard this so many times before...usually coming from bad management

 

Perhaps they just need an arrangement with a factoring company to accelerate the receipts...

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28th Jan 2016 12:07

Public Sector Borrowing required?

Tom 7000 wrote:

Perhaps they just need an arrangement with a factoring company to accelerate the receipts...

I thought they did with someone called PSBR

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