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<b>Budget 2006:</b> Small business and the budget. By Simon Sweetman

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23rd Mar 2006
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Simon Sweetman tries to find something sensible to say'.

Well, I sat and watched the speech. Quite early on the Chancellor mentioned 4.3 million small businesses and 3.7 million self employed and I thought, does he know that one includes the other? Then he said something about enterprise and implied that small business was a good thing, which is OK but butters no parsnips. Then I spent the rest of the time crossing out all the measures that various people in large accountancy firms had assured me would be included, realised that he had not taken the advice of the Daily Express and abolished Inheritance Tax, picked up a throwaway line about grants for workplace nurseries and another one about employer input into courses at Further Education Colleges, and that was about it.

To be fair, we keep asking for stability in the tax system and fewer changes - so we can hardly complain when there are few changes. The upward extension of the SME R&D Tax Credits scheme to medium large business is not really a small business issue, and where small business does experience problems in this area, they are more to do with administration than the legislation.

Similarly, the new anti-avoidance measures mean nothing to small businesses: there was an exemption from disclosure for inhouse plans at SMEs, probably because they've all been rubbish.

There was also the report on administrative burdens from KPMG and a commitment to a year on year reduction, particularly on forms and, perhaps more important, on reviewing inspections and enquiries. That may come under the heading of jam tomorrow, but at least the subject of reduction is now on the agenda and it is up to the new (well, slightly used) Administrative Burdens Advisory Board to keep banging on about it to make sure that it stays there. Even being included among the people who might get jam one day is something. Of course some people will be disappointed by KPMG's failure to discover that we are the most put upon body of persons on Earth: such a pity when your favourite moan gets undermined by facts.

But in the end it is Lord Carter's report that might be most interesting, especially since it has been instantly accepted in full. Accountants and other deliverers of tax returns will have to rewrite the business plans for their tax departments by 5 April 2008, after which time self Assessment tax returns will have to go in by 30 September on paper, or 30 November online (always likely after Lord Carter discovered how much less time the rest of the world gives people to file their returns). Apparently, the report was held back to see how the system coped with the 31 January deadline this year. It seems to have coped fairly well, with very nearly two million returns filed online this year and 250,000 in the last week without the system falling over.

By 2008 one would expect at least half of SA returns to be filed online anyway, though the target is just about everybody by 2012. But Brown has avoided compulsion for (at least) the non-business taxpayer, where the high proportion of older taxpayers who have to file returns would have created many problems.

However, there will be no hand filing of computer produced returns. Returnees will be required to fill in the paper original or you go online. That means that HMRC must get its software sorted so it can cope with CGT in particular. That ought not to be a problem - it is likely to mean putting the computation in as an attachment, and that facility should be with us this year.

So all but the very smallest agents are going to be filing on line by 2008. That means 30 September is not going to be relevant to them, and the panic period for tax return preparation will be October and November, when all the staff should be at work: wait for the wringing of hands at the loss of the opportunity to celebrate Hallowe'en and Guy Fawkes properly. Some accountants may need to start preparing their families for a Christmas with mum or dad actually at home.

There is a carrot for early submission, too, with the enquiry window closing twelve months after filing. There is no mention that I have seen of any changes to payment dates, but a disconnection of payment dates from filing dates might be no bad thing ' it avoids the 'I've got to find £10,000 in 24 hours now my return has been completed' syndrome.

This could be an opportunity. Now you can explain to that difficult client that you've had to reorganise and you can give them a date to get their records in or they'll have to pay more ' go on, you've wanted to do that for years. Of course, you will have to find the tax department something to do between November and April.

But here we are. We asked the Chancellor to stop mucking about with the system year on year, and this year he's stopped. We shouldn't grumble, should we?

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Replies (5)

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By andyprentice
30th Mar 2006 13:04

other countries?
in the US the filing deadline is four months and a couple of weeks, but you can extend that by six months to give a total filing window of ten months and two weeks - as long as you pay your taxes (or estimated taxes).

So why the need to change the time we have now??

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By markgosling
23rd Mar 2006 13:31

Problem with different date for online filing
I did online filing this year for the first time.
In general I was very pleased with the process.

However I can see a problem with having one deadline for paper and a later deadline for online filing.

This year a long established client gave me his records in January as usual. Towards the end of January I attempted to file his return online but it was rejected. When I checked why, it was because they did not have a record of the authority for me to act has his agent. This is despite the fact that the 64-8 was sent in years ago, and I had spoken to the Revenue about him several times in the past. They did the usual checks each time I phoned and they accepted that I was the authorised agent. However when I phoned this time they stated that there was no authorisation in place.
I had to print the return and send it in the post. Fortunately it arrived in time and there was no fine.
However under the proposed filing dates, If a client brings in his books in October or November and you cant file online because there is no 64-8 in place or they have lost it, then the client will get a £100 fine.

If they are not going to accept computer prints of returns. then we will also have to fill in the returns by hand.

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By edmundwright
24th Mar 2006 15:25

Filing on line generates Recovery office demand to client
I am not hopeful about filing ITRs online.
Last year I put virtually all my P35s on line and still Recovery Office sent their usual nasty threatening letter to a client, alleging non-delivery of the P35. My complaint was effectively ignored, and no explanation provided as to how an electronic submission, properly acknowledged, can be completely ignored.Anyone else with that experience?

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By baseline
27th Mar 2006 19:49

Plug?
I used to be tax neutral but now I'm just a down to earth live wire!

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By PeterMarsh
23rd Mar 2006 15:20

Perhaps I am being cynical..
If the filing date is brought forward by 2 months, I cannot see the accountancy profession being able to complete the majority of its work in a period reduced by 2 months. This would lead to more penalties and thus more revenue....
I am considering retirement, and this will influence my decision!

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