Abolishing Annual Tax Return?

Abolishing Annual Tax Return?

Didn't find your answer?

Most of my clients are self employed, All I submit on line. So in future I lose these clients??

I just cannot see this working, no details or explanation as to how this could possibily

work, all very vague. Maybe they are talking about paper returns? What about those who

do not use digital technolgy and cannot afford a smrt phone or PC? It would be an administrative

nightmare.

Replies (74)

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By petersaxton
18th Mar 2015 15:54

HMRC website

Go to the HMRC website and then you may understand what is going to happen.

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Replying to insolventnl:
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By Portia Nina Levin
25th Apr 2015 15:40

(No subject)

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Replying to insolventnl:
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By TonyUK
18th Mar 2015 16:23

Could cause a lot of disruption

petersaxton wrote:

Go to the HMRC website and then you may understand what is going to happen.

Ok, just read that. Still not very clear without a specific example.Things like marital status,

child benefit would be auto detected, but it looks to me like the exisiting tax return will be simply

replaced by an alternative on line document, but if reat time I cannot see this working. If I had

to do these every month my fee would rise - and there would be fines probably as for exisiting

payroll RTI returns.

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Replying to Southbankdelboy:
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By dhughes1975
18th Mar 2015 16:34

The BBC article I read stated that clients would still have the option of filing annually if they prefer.  I'm guessing most will take this option.  Failing that we may have an increase in incorporations, particularly with the 'borderline' cases.

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By JWD Accounting
18th Mar 2015 15:55

I imagine you will just be entering your client's figures in a "digital account" instead of a tax return.

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By Fenella
18th Mar 2015 15:55

Sounds mad to me

Given that PAYE RTI is not exactly successful.....for my own employer I can instantly see an issue, in that they have periods of the year when they make a loss, saved by busy periods when they make profit. Will they get a tax rebate in the quiet periods, followed by a bigger bill in the busy times? This may help cash flow but will create loads more work. We currently do 'proper' accounts annually, with quarterly accounts to keep an eye on things. Will we suddenly have to do 'proper' accounts at every month end and go from an annual to a monthly bill from the accountants?Yikes!

 

Although looking on the bright side it will create lots of work for accounts savvy types....

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Replying to emanresu:
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By TonyUK
18th Mar 2015 16:24

Real time does mean going monthly! Ugly!

Fenella wrote:

Given that PAYE RTI is not exactly successful.....for my own employer I can instantly see an issue, in that they have periods of the year when they make a loss, saved by busy periods when they make profit. Will they get a tax rebate in the quiet periods, followed by a bigger bill in the busy times? This may help cash flow but will create loads more work. We currently do 'proper' accounts annually, with quarterly accounts to keep an eye on things. Will we suddenly have to do 'proper' accounts at every month end and go from an annual to a monthly bill from the accountants?Yikes!

 

Although looking on the bright side it will create lots of work for accounts savvy types....

I sure would not want clients having to come to me every month with their paperwork, sometimes I have a hard enough job getting them to come

once a year! And abolishing class 2 NI, how does hat affect state pension entitlement and  free national health?

 

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Replying to Wanderer:
Red Leader
By Red Leader
18th Mar 2015 17:12

NHS

tony lecart wrote:

And abolishing class 2 NI, how does hat affect state pension entitlement and  free national health?

Class 2 NI affects state pension entitlement, but it has no connection with free NHS entitlement.

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By andy.partridge
18th Mar 2015 15:58

Opportunities

It seems to me that every time HMRC make things easier it gives them new opportunities to penalise people for getting it wrong

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By 0098087
18th Mar 2015 16:04

They will want info every month and no doubt if you make a correction at year end you'll get an enquiry. Time to retrain

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By johnhenry
18th Mar 2015 16:17

Who thought this was a good idea?

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By 0098087
18th Mar 2015 16:22

Its just like RTI. Badly conceived and implemented. They didn't listen.

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By vinylnobbynobbs
18th Mar 2015 16:37

Absolute Tosh!

having read the cunningly worded document prepared by HMRC what they are actually saying is that everyone will have access to their digital account (digital is very much HMRC's buzzword) which basically means that every one will be able to access their account online - so no change there. 

The rest of the proposals are subject to the usual consultation.  How on earth can they manage without returns, do they want the information monthly?

 

It smacks of Big Brother information gathering systems with the government wanting to know everything about everybody.

With all government IT projects it will never work!

 

 

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By Expat24
18th Mar 2015 16:43

What about non-residents, remittance basis users...??.

Seems this has been "thrown out" there without there being any real understanding of the complex situations. 

Be interesting to see where we are with this in 5 years!! 

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By pawncob
18th Mar 2015 16:51

The end is nigh

In the beginning there was paper. And lo, the paper was good.

But Hector was not happy with paper, for he deemed it wasteful of resources and inefficient.

So Hector devised on line filing and RTI and then digital accounts and insisted that everybody file their returns on a monthly basis  and all organisations submit details of tax deducted to HMRC.

And the world of HMRC collapsed under a mountain of data that nobody could resolve.

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By frankdavid
18th Mar 2015 17:00

Just had a read of HMRC's ideas on their web site." Taking data straight from small businesses own software"," paying tax in year", "collating data from banks re savings income" 

 

Oh what a brave new world (ie what a massive car crash waiting to happen)

 

The only good thing is that I am retiring at Christmas, cant think of a better time

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RLI
By lionofludesch
18th Mar 2015 17:26

Not a Guinea Pig

I won't be doing this until it's compulsory.

Some other muggins can sort out the glitches and bugs.

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By 3569787
03rd May 2016 16:13

Where is

!

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RLI
By lionofludesch
18th Mar 2015 17:55

Where does it say ......

Where does it say that filing monthly is less of a burden than filing annually ?

I'd like to take that up with Mr Gauke.

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Replying to johnt27:
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By andy.partridge
18th Mar 2015 18:12

Same page

lionofludesch wrote:

Where does it say that filing monthly is less of a burden than filing annually ?

I'd like to take that up with Mr Gauke.


It's on the same page that says RTI is less of a burden than a P35.
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By Pavilionaire
18th Mar 2015 18:03

I'm an owner-manager with 3 staff, I act for about 150 trading entities.  I'm having trouble getting my head round the idea of monthly reporting for 150 entities, and that's without the personal tax-only clients.

What with the abolition of Tax Returns, the introduction of AE AND RTI penalties I'm guessing we won't have seen a rush for retirement like this since the introduction of Self-Assessment in 1996/97?

 

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By 3569787
03rd May 2016 16:13

Mandatory or not

.

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By Jekyll and Hyde
18th Mar 2015 18:24

there is another option

Ltd co disclosure is pretty much non existent now for the the type of client this would adversely affect. I see no mention to this affecting Ltd co's so as a sector this could also create another benefit for Ltd co as it can be seen as less admin burden.

Other than payroll for the director, what is the real difference in the work we now perform for the micro entity, sorry forgot dividend and overdrawn directors loan issues, but as time goes in I find this less and less a problem with educated clients.

 

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By uncle3munkle
18th Mar 2015 18:27

Tax Returns abolition

Mr Gauke tells us that "this is a big leap in modernising our tax system, putting good customer service at its heart"

How refreshing to know that we can now anticipate "good customer service"

 

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By petersaxton
18th Mar 2015 18:34

Monthly reporting

I will have to make sure my clients do their bookkeeping on a daily or weekly basis otherwise they will all be finalising their mess in the last few days before the deadline and wanting me to look at and change everything!

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By PALacc
18th Mar 2015 22:12

Already clients can already do their own self assessments and still pay us to complete them on their behalf to ensure they are correct.

Those clients will still need accountants to enter this data into the digital accounts. Likewise clients who have accountants to complete limited company accounts won't suddenly be able to do those. Clients who use software already such as xero/sage are capable of generating "accounts" but still employ us to prepare them correctly and apply the correct tax treatments.

I might be a little naive to think that those clients will still want us in place to continue to do that work and update their digital accounts and ensure that the tax is correct?

If they wouldn't want us to do that then surely this budget is the end of the accountancy profession if clients will now just be doing all of this work for themselves via their online digital account?

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By 0098087
18th Mar 2015 22:24

If they want it monthly it won't be possible. Most of mine don't use a computer for their records.

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Replying to ianw33:
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By TonyUK
18th Mar 2015 22:56

I am just one person with around 50 clients.

0098087 wrote:
If they want it monthly it won't be possible. Most of mine don't use a computer for their records.

I complete around 5 per month. I magine if they all had to come to every month, I would not be able to cope with this. You

are right most of mine dont use computers eithers. I just hope there will be an option to submit annually. Being semi retired I do

not wannt any complications like this.

 

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By seawych
18th Mar 2015 23:05

I wonder...

If you don't make a return, how can you be charged penalties for inaccuracies in a return?

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Replying to I'msorryIhaven'taclue:
By petersaxton
19th Mar 2015 01:29

Penalties

seawych wrote:

If you don't make a return, how can you be charged penalties for inaccuracies in a return?

I thought you would be charged penalties for not making a return.

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By coolmanwithbeard
18th Mar 2015 23:17

Not all bad!

If so much info is available directly it will save a paperchase

I know that the only return missed 31/1 this year was missed because of info not passed to me

info already in hmrc computers such as P60 

So if we can start to get that and exchange it with hmrc I can see some positives

 

 

 

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Me!
By nigelburge
19th Mar 2015 09:50

Am I the only one here that believes that this is a lot of speculation and that IF it does happen, it will certainly not be by 2020?

HMRC haven't even got RTI right yet - I simply do not believe that the next government, of whatever hue, is going to have this as a priority. After all, the only reason RTI was rushed in was to link up with Universal Credits.

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Jennifer Adams
By Jennifer Adams
19th Mar 2015 10:35

We should have seen this coming...

... HMRC issued a consultation paper last month - see here for article:

https://www.accountingweb.co.uk/article/demise-100-penalty/572092

The paper was issued 2 Feb and the deadline for comments is May - long time.

The consultation was the proposal to abolish the £100 penalty for non submission to be replaced by penalties like motoring offenses ie one late = OK then a higher penalty the more number of times you dont submit on time.

You can see the benefit for the govt of monthly payments/submissions - money coming in every month rather than in 2 lots.

I am going to a Working Together event next Tuesday in Exeter - I am sure that this will be high on the agenda and I'll write an article on what is said - if anything.

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Replying to gaffer786:
By coolmanwithbeard
20th Mar 2015 07:19

VAT does this

JAADAMS wrote:

... HMRC issued a consultation paper last month - see here for article:

https://www.accountingweb.co.uk/article/demise-100-penalty/572092

The paper was issued 2 Feb and the deadline for comments is May - long time.

The consultation was the proposal to abolish the £100 penalty for non submission to be replaced by penalties like motoring offenses ie one late = OK then a higher penalty the more number of times you dont submit on time.

You can see the benefit for the govt of monthly payments/submissions - money coming in every month rather than in 2 lots.

I am going to a Working Together event next Tuesday in Exeter - I am sure that this will be high on the agenda and I'll write an article on what is said - if anything.

 

Its the way the VAT penalties work

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By Stuart.thomson
19th Mar 2015 10:58

Accountants to evolve!
I think this is just the way of the world. It was always going to happen and will be extended.

The challenges I see are:
1) accuracy of client books (checking processes)
2) moving from year end arrears focus in firms to regular work with cause big cultural issues at firms
3) responsibility and signing on the dotted line. This will probably be deemed as part of any submission
4) HMRC will continue to shift their review processes towards statistical sampling.

I hear all the issues but I think this is a good idea. Yes there will be fall out. Small sole practitioners may struggle to ensure compliance, poor quality work /dodgy client base will bring additional scrutiny and increased software costs. But in the same way clients put money aside to pay their tax they now have the ability to do it with more accuracy. Brings a whole new dynamic to Know Your Client which I think has to be positive. The profession needs to move on and keep up to date with its clients.

The big question is will clients pay for the extra work or can firms absorb this with increased efficiency/automation.

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Replying to martinjrichards:
RLI
By lionofludesch
19th Mar 2015 11:53

Paying to work

Stuart.thomson wrote:
The big question is will clients pay for the extra work or can firms absorb this with increased efficiency/automation.

Indeed.  The Government generally ignores the issue of who pays to do its work.

No wonder HMRC staff numbers can be cut.

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By kirstiej
19th Mar 2015 11:58

I agree this is the way of the world, and is more an inevitability than an actual policy.  However, I'm sceptical about how much difference it will really make.

If your tax is straightforward, it is already very easy to fill in a tax return, so not much change there.

Equally, although the universal January 31st deadline may disappear, I can't imagine the government are going to say "It's fine by us, just pay your tax and fill in your return when you have a minute, no rush."

I expect more personal tax information will be available on-line by 2020 - but then given that so much information is already availaible on-line, it would be very surprising if it weren't.

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By Tonykelly
19th Mar 2015 12:15

think it's a step forward

I haven't read all of the comments above, but I guess they are mixed opinions.

You could have a flat rate tax for self-employed people and file your income returns online every 3 months. 

There would still be the option to prepare accounts based on actual expenses.

Guess will have to wait for more details over next couple of years.

 

 

 

 

 

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By Stuart.thomson
19th Mar 2015 20:32

Just reducing government working capital!
I think we need to also remember the wider economic and political climate. In the same way Gordon Brown doubles his tax takings in the early years of the labour government by moving from a PY basis to CY basis this plan enables tax to be collected earlier. It is just timing but it may be worth the redemption of several billions of gilts.

So lower government interest costs saving almost 0% and asking the commercial sector to fund this costing say 5%. You just have to love politics!

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By 0098087
19th Mar 2015 20:45

Just a small point Gordon brrown did not bring in self assessment it was Ken Clarke

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By Stuart.thomson
20th Mar 2015 00:46

I meant the quarterly payment regime which I think was mr brown and very valuable it was too as he went on a spending spree after that.

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RLI
By lionofludesch
20th Mar 2015 07:46

Leaked Return

Here's a leaked monthly return for the self employed.  Shouldn't be too hard to fill in

 

1. How much money have you got left ?

2. Send it to us.

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Replying to atleastisoundknowledgable...:
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By vinylnobbynobbs
23rd Mar 2015 09:08

New Return

lionofludesch wrote:

Here's a leaked monthly return for the self employed.  Shouldn't be too hard to fill in

 

1. How much money have you got left ?

2. Send it to us.

 

The leaked document I saw was:

1How much money do you earn?

2 Send it to us digitally.

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By JCresswellTax
20th Mar 2015 09:14

2020?

I'll be 39 then, eek!

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Replying to 1796971:
By petersaxton
23rd Mar 2015 09:12

Same

JCresswellTax wrote:

I'll be 39 then, eek!

That's about the same as me but upside down.

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RLI
By lionofludesch
23rd Mar 2015 09:23

Affordability

As an example, I have a client who's employed as a physio.  She also has a bit of private practice work.  She gives me a list of her fees every year, there are some nugatory expenses to claim - bit of mileage, consumables, laundry - and I charge her £200.  

If I have to do all this monthly, what will my fee be ?  £600 ?  £1000 ?

Likely outcome is that she'll retire.

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Replying to lionofludesch:
By petersaxton
23rd Mar 2015 09:39

Online bookkeeping

lionofludesch wrote:

As an example, I have a client who's employed as a physio.  She also has a bit of private practice work.  She gives me a list of her fees every year, there are some nugatory expenses to claim - bit of mileage, consumables, laundry - and I charge her £200.  

If I have to do all this monthly, what will my fee be ?  £600 ?  £1000 ?

Likely outcome is that she'll retire.

If she did it online - there would be versions that would deal with how she records her data. Not all software will require a bank account - then you just have to review the transactions for errors every month. You most likely wouldn't need to prepare monthly management accounts.

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Replying to Duggimon:
RLI
By lionofludesch
23rd Mar 2015 12:34

Cost

petersaxton wrote:

lionofludesch wrote:

As an example, I have a client who's employed as a physio.  She also has a bit of private practice work.  She gives me a list of her fees every year, there are some nugatory expenses to claim - bit of mileage, consumables, laundry - and I charge her £200.  

If I have to do all this monthly, what will my fee be ?  £600 ?  £1000 ?

Likely outcome is that she'll retire.

If she did it online - there would be versions that would deal with how she records her data. Not all software will require a bank account - then you just have to review the transactions for errors every month. You most likely wouldn't need to prepare monthly management accounts.

At the moment, the accounts take about an hour. Doing twelve submissions is bound to take far more that.

There's bound to be a disproportionate increase in cost here.

The fuss of dealing with this tiny business on a monthly basis will just make it not worth carrying on.

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Replying to carnmores:
By petersaxton
23rd Mar 2015 12:42

Why?

lionofludesch wrote:

petersaxton wrote:

lionofludesch wrote:

As an example, I have a client who's employed as a physio.  She also has a bit of private practice work.  She gives me a list of her fees every year, there are some nugatory expenses to claim - bit of mileage, consumables, laundry - and I charge her £200.  

If I have to do all this monthly, what will my fee be ?  £600 ?  £1000 ?

Likely outcome is that she'll retire.

If she did it online - there would be versions that would deal with how she records her data. Not all software will require a bank account - then you just have to review the transactions for errors every month. You most likely wouldn't need to prepare monthly management accounts.

At the moment, the accounts take about an hour. Doing twelve submissions is bound to take far more that.

There's bound to be a disproportionate increase in cost here.

The fuss of dealing with this tiny business on a monthly basis will just make it not worth carrying on.

You would need to do a 12th of what you do every year and then add on the year end accounts which has to be done any way. If she is using online bookkeeping then you wouldn't have to even do the accounts. I would assume that any adjustments are either calculated in the monthly figures or done on a yearly basis as before. There's a lot of speculation but after the consultation period I am sure there will be a lot of rethinks.

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