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Any news on the "death" of tax returns ?

Any news on the "death" of tax returns ?

Didn't find your answer?

Is anybody aware of any further substantive information regarding the end of annual tax returns as promised by George Osborne and David Gaulke back in March?

We were expected to believe that digital tax accounts would be available for "five million small businesses and ten million individuals" by early 2016 and that everyone would pay the right amount of tax effortlessly with just a few taps on their smartphone or tablet......

Perhaps I've missed something (well, I've been working hard trying to keep my clients up to speed in relation to the new dividend tax regime, the restriction of loan interest relief on their rental properties, the restrictions on pension tax relief, the withdrawal of child benefit, the complications of auto enrolment etc. etc.) but shouldn't we have heard something by now about this bright new world of tax?

Or is it possible that somebody at the Treasury has realised that our absurdly complicated tax system is completely incompatible with what was promised ?

Replies (62)

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By Tim Vane
21st Oct 2015 19:05

It looks like things are moving forward at a pace that is remarkably rapid by HMRC standards. Unlike many recent initiatives this one seems to be gathering momentum rather than losing it.

The pre-population of certain data onto the SA form that was announced in this week's agent update shows that HMRC are serious - they have been talking about this for absolutely years and never done a thing. Then, a minister gets involved and it starts to happen almost overnight. I think that it's only just beginning. Given the data that HMRC can get access too (employment,banks, divs, pensions, benefits etc) and the general willingness of parliament to legislate to get more, I think there is huge scope for doing away with vast swathes of the reporting on a return. At some point, only trade income will be left, and we might see cloud bookkeeping vendors racing each other to reach HMRC's goal for them and cut out what traders will perceive as the unnecessary expense of the middle men (us).

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RLI
By lionofludesch
21st Oct 2015 19:45

Profits

It's not going to work like that for trading profits though, is it ?

Or dividends ?

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Replying to Largerdanlife:
Image is of a pin up style woman in a red dress with some of her skirt caught in the filing cabinet. She looks surprised.
By Monsoon
21st Oct 2015 20:36

They think...

lionofludesch wrote:

It's not going to work like that for trading profits though, is it ?

Or dividends ?

They probably think it will.

 

We know better.

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By kirstiej
21st Oct 2015 20:57

Unless tax legislation gets much simpler there will still be a need for expert advice.

How many accountants honestly make their money from people with straightforward tax returns that just involve copying the information from a p60? That is already money for old rope.

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Replying to Cheshire:
By Red Rich
21st Oct 2015 21:39

I think the Government are getting carried away with the 'success' of RTI. They are obviously under the impression that self assessments can go the same way but as we know the work that goes into a self assessment is fifty times more complicated than a simple PAYE.

Reality check needed in Westminster. 

   

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By Tim Vane
22nd Oct 2015 01:07

Yes, there will always be more complex trading profit scenarios to deal with. But I think you have to look at who HMRC might be targetting with these changes. Perhaps it's not really a question of wanting to kill off the return, just cut off the seemingly unending supply of low-rent tax advisers who abuse the system.

HMRC just do not want to have to deal with as many agents as they do currently. What they have openly stated is that they would prefer a smaller number of trusted agents who do the value work and (by inference) the more complex SA work, and the less-trusted agents will be far more restricted in what they can do for their clients. These are the agents that might currently deal with the massed-rank of taxi driver clients (all of whom miraculously have the same level of expenses as a percentage of revenue) or the agent who allows an entire household's living expenses to be included as a business deduction. Or agents who treat capital and revenue as if those two imposters were just the same. Basically those agents who just churn out dodgy return after dodgy return, perhaps because they are unscrupulous but sometimes because they have no real idea what they are actually doing. I offer as exhibit A some of the nonsense that gets raised by "accountants" on this very forum.

There's a 17 billion pound tax gap in the small business compliance market and HMRC sees agents as being as much a part of the problem as the solution.

So yes, they'll make it so that Joe Taxi Driver can no longer go to the low-rent £150 shops to make nonsense expense claims that bear no relation to reality. The simple fact is that Joe, left to himself, wouldn't have the imagination (or courage) to claim those wildly ridiculous expenses. These tax payers will either have to put in real income and expense figures backed by electronic transactions through real-time bank information, or they will have to go to the more scrupulous value-added agents who will do the job properly. The £150 shop just won't be allowed to file that sort of return because they are not a "trusted" agent.

The comparison that should be made when discussing the digital return is not with RTI, which is about reducing HMRC administration, but with CIS, which certainly seems to have gone a long way toward achieving its aim of combating avoidance in the previously cash-dominated building industry. It may be an admin headache, but HMRC don't care, because they aren't the ones who get the headache.

And so it is with "killing off" the tax return. It's not so much about the death of the return, it's about reducing the risk of the return being a pile of nonsense, which oh so many are, in the sense that they bear little relation to reality. Perhaps, in many ways, it's about the death of self assessment itself. The realisation has dawned that if we are going to have a complex tax code then it shouldn't be left to the untrained and unscrupulous to try and follow it. Certainly not the taxpayer himself, and by extension, an adviser with no experience or qualifications.

Anybody can call themselves an accountant after all. Perhaps the plan is that by automating 90% of the return and leaving the remaining 10% to be handled by "super agents", HMRC is trying to reverse the spiralling descent of standards in the profession.

I think I'm OK with that.

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Replying to johngroganjga:
By SteveHa
22nd Oct 2015 09:08

Unqualified

Tim Vane wrote:
Certainly not the taxpayer himself, and by extension, an adviser with no experience or qualifications.

A tad offensive. I have no formal qualifications, but I reckon 20 years with HMRC in a compliance office and 8 years in practice still means that the job will get done right. Why are people so quick to dismiss QBE people.

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Replying to Justin Bryant:
By Tim Vane
22nd Oct 2015 09:31

Read the whole sentence.

SteLacca wrote:

Tim Vane wrote:

Certainly not the taxpayer himself, and by extension, an adviser with no experience or qualifications.

A tad offensive. I have no formal qualifications, but I reckon 20 years with HMRC in a compliance office and 8 years in practice still means that the job will get done right.

My, you do take offense quickly. I quite clearly said "experience or qualifications" so get off your high horse. I am QBE myself.

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Replying to Justin Bryant:
By petersaxton
22nd Oct 2015 10:10

What Tim meant

SteLacca wrote:

Tim Vane wrote:
Certainly not the taxpayer himself, and by extension, an adviser with no experience or qualifications.

A tad offensive. I have no formal qualifications, but I reckon 20 years with HMRC in a compliance office and 8 years in practice still means that the job will get done right. Why are people so quick to dismiss QBE people.

I think Tim was meaning no qualifications AND no experience.

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Replying to DJKL:
By SteveHa
22nd Oct 2015 10:23

Better

petersaxton wrote:

I think Tim was meaning no qualifications AND no experience.

Much better, I could live with that without a problem.

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By petersaxton
22nd Oct 2015 06:58

What the government wont do

is make it compulsory to use online bookkeeping and attachment of receipts with HMRC having access to all online accounts. If they did that then HMRC could check the data and every business would make a lot more effort to come up with sensible figures.

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By leicsred
22nd Oct 2015 09:20

Monthly returns

At Iris World there was a speaker from Tolly's (I think) who was talking about this, his view was that this was coming soon and that it would go as far as monthly returns for all tax payers.

I don't think it is necessarily a concern as to losing clients as most of our clients have no interest in doing it themselves, and would be too terrified of getting it wrong. But it will present logistical issues for those who aren't keen on doing online bookkeeping (or any kind of book keeping!).

Also I think that many clients will still want an experienced eye reviewing their data, even those who use software, as now. It's the case now that anyone could do their own returns and create their own figures, I can't see that those who don't do it now will suddenly feel confident that they will be able to do it going forward because some information is pre-populated.

However I do see the end of the "simple" SA return, e.g. pensions, P60's interest and quoted dividends, but as others have said I think that is sensible as it seems a bit ridiculous, it will help us in reality as we spend a fair amount of time trying to get such people out of self assessment as, in many cases, we can't see any benefit to them.

We will see, it is a little daunting (as change often is) and it may lead to a reduction of employment in our sector as less transaction posting is required, but I feel that the experience and expertise of those qualified or QBE will still be just as much in demand.

 

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Replying to whitevanman:
By petersaxton
22nd Oct 2015 10:15

Online bookkeeping

leicsred wrote:

At Iris World there was a speaker from Tolly's (I think) who was talking about this, his view was that this was coming soon and that it would go as far as monthly returns for all tax payers.

I don't think it is necessarily a concern as to losing clients as most of our clients have no interest in doing it themselves, and would be too terrified of getting it wrong. But it will present logistical issues for those who aren't keen on doing online bookkeeping (or any kind of book keeping!).

Also I think that many clients will still want an experienced eye reviewing their data, even those who use software, as now. It's the case now that anyone could do their own returns and create their own figures, I can't see that those who don't do it now will suddenly feel confident that they will be able to do it going forward because some information is pre-populated.

However I do see the end of the "simple" SA return, e.g. pensions, P60's interest and quoted dividends, but as others have said I think that is sensible as it seems a bit ridiculous, it will help us in reality as we spend a fair amount of time trying to get such people out of self assessment as, in many cases, we can't see any benefit to them.

We will see, it is a little daunting (as change often is) and it may lead to a reduction of employment in our sector as less transaction posting is required, but I feel that the experience and expertise of those qualified or QBE will still be just as much in demand.

If clients don't want to do their own bookkeeping they could always use bank feeds and scan documents and attach them and ask the accountant to do the coding. This would be more efficient for both parties rather than the accountant having to travel. If clients are really lazy they could send the documentation to the accountant and they could do the scanning and bookkeeping for more fees.

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By Anthony123
22nd Oct 2015 09:30

Am I the only person

who thinks that advisers may have a role in checking whether or not the pre populated data is correct?

There seems to be an incredible level of confidence in the accuracy of data by the above posters. At the moment HMRC cannot even get reliable data from the DWP when it sends out annual P800s. I hate to think what is going to turn up on pre-populated tax returns. Not all RTI returns are 100% reliable. Not all bank accounts with "your" name on are yours (I have one in "my" name only - the bank's action not mine - for a relative).

 

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By cheekychappy
22nd Oct 2015 09:31

This is not a qualified / unqualified debate. Start another thread for that.

My clients, regardless of format, don’t want to do their own returns. They don’t give a rats [***] how the information gets to HMRC as long as it is accurate and on time.

I don’t know what all the fuss is about to be honest. We have had changes recently with AE, before that RTI and guess what? Clients generally don’t worry about it and we just get on with it. Some of us even manage to get on with it without a good ole moan.

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By Chris Maslin
22nd Oct 2015 10:24

I really don't understand why so many accountants are so negative about stuff like this...like the slating of the PAYE beta I saw on here yesterday.

Most of the enquiries/checks we get into stuff we submit is on personal tax, and it's virtually always a client who forgot about a P11D, or they thought they'd cleared their student loan but hadn't.

I don't see any reason why it's a bad thing that we could get to a situation where we (or the client...I don't think this is a place for accountants "protecting" their role) open up the tax return, and 90% of it is prepopulated for us to check.

Indeed, things have kind of come full circle.  Pre 1997, you'd send all your details to HMRC, they'd then do your tax.  Then to now, you do your own tax, submit, and HMRC later decide whether to challenge.  Going forwards, HMRC do your tax again from info they already have, and you decide whether to challenge any of it.

Good times.

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By Elvis11
22nd Oct 2015 14:31

I have read the above comments with interest.

My original post questioned whether there was any "substantive information" about the "end of the tax return" and the answer appears to be a resounding no, but a feeling that significant changes are coming with no precise details having been released.

So people are left to speculate about pre-population of data and monthly returns (so twelve times as many returns) and the impact this might have on the profession and taxpayers.

I run a small accountancy practice where we largely deal with the self employed, partnerships and personal tax cases. We complete about 500 SA returns each year. A few clients are very organised and compliant and the majority make some effort to keep reasonable records but need significant help and chasing up so that we can get an accurate return prepared. They are often baffled by the complexities and illogicalities of the tax regime, usually feel their tax payments are too high and always know somebody else just like them who pays less tax. Some are computer literate and some are not.

And then we also have a small proportion of clients who are a nightmare, they appear during January, may well be grateful for what we do, but work on their affairs is always slow, involved and difficult.

Seeing as there are only three of us here, the thought of monthly returns with our client base is an impossibility. Even if we did take on extra staff, the vast majority of my clients would be unable to bear the inevitable hike in fees required to make this viable.

It is laughable to think that the majority of self employed individuals will suddenly be able/willing to make meaningful monthly returns using cloud based accounting software. This might seem like an option to some Civil Servant with little real life experience, but it's not how things would work at this end of the market.

Pre-population may well help a little, but on the first client I looked at on this, his HMRC record said he received zero state pension (he's 79 years old) and said there was no information about underpayments being coded (there should be). I realise it is very early days, but do people really expect HMRC to pre-populate data accurately, given their general ineptitude?

I fail to see how these kind of changes will result in more accurate returns as Tim Vane suggested. Our experience suggests HMRC are carrying out fewer and fewer enquiries as they no longer seem to have the staff to do this and the closure of local tax offices has had a detrimental effect on their effectiveness. More enquiries would inevitably result in more compliance over time. I have seen examples where subcontactors have completed their own returns, made ridiculous and inaccurate expense claims and generated implausible refunds year after year without ever being challenged. There is no reason why this could not be stopped using the current system, other than HMRC do not seem to have the staff or desire to resolve it.

Anyway, to go back to my original posting, it would very nice if HMRC could give us some details about what is coming and when, so that small accountancy practices can plan accordingly.

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By SteveHa
22nd Oct 2015 14:56

The direction HMRC appear to be heading at the moment is more of a making information available. SA Online, for example, currently gives details of underpayments coded out (well, theoretically, every single case I've seen says info not available and check the coding notice, though in many cases you can get to the tax code notice from there), and NIRP (welcome this morning since I've used it for two clients).

 

P60 information is also coming soon. What this effectively means is that for the majority of small corporate clients the only information we will need to source from the client will be investment income and gains (very few have further income streams in reality). We will be able to extract dividends from the company accounts, and at some point, even bank interest will be available on HMRC systems.

 

I fail to see how this is not a good thing for the accountancy profession. I know I spend far too much time chasing information. To have it available without relying on the client will not only save that time, but will also allow us to spread the work more manageably rather than suffer the traditional "January madness".

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By petersaxton
22nd Oct 2015 15:20

Elvis11

“It is laughable to think that the majority of self employed individuals will suddenly be able/willing to make meaningful monthly returns using cloud based accounting software. This might seem like an option to some Civil Servant with little real life experience, but it's not how things would work at this end of the market.”

Bank feeds followed by scanning documents shouldn’t be beyond most people. If they can’t scan documents then the accountant can. There’s so many people unemployed right now I don’t think it would be too expensive for accountants to employ one person to scan documents that the client provides. An accountant can then attach the receipts and code the transactions.

“Pre-population may well help a little, but on the first client I looked at on this, his HMRC record said he received zero state pension (he's 79 years old) and said there was no information about underpayments being coded (there should be). I realise it is very early days, but do people really expect HMRC to pre-populate data accurately, given their general ineptitude?”

HMRC shouldn’t really need to get involved. The banks, pension providers, etc. should provide the data that should pass through to the taxpayers record.

“I fail to see how these kind of changes will result in more accurate returns as Tim Vane suggested. Our experience suggests HMRC are carrying out fewer and fewer enquiries as they no longer seem to have the staff to do this and the closure of local tax offices has had a detrimental effect on their effectiveness. More enquiries would inevitably result in more compliance over time. I have seen examples where subcontactors have completed their own returns, made ridiculous and inaccurate expense claims and generated implausible refunds year after year without ever being challenged. There is no reason why this could not be stopped using the current system, other than HMRC do not seem to have the staff or desire to resolve it.”

If HMRC were able to investigate by looking at online bookkeeping rather than travelling to taxpayers they could do a lot more effective work.

I’m sure this could all be achieved if people wanted to make efficiencies rather than say everything is too difficult.

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Replying to tltodman:
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By Elvis11
22nd Oct 2015 16:37

So even if we all complied, how does this help taxpayers...

"Bank feeds followed by scanning documents shouldn’t be beyond most people. If they can’t scan documents then the accountant can. There’s so many people unemployed right now I don’t think it would be too expensive for accountants to employ one person to scan documents that the client provides. An accountant can then attach the receipts and code the transactions."

I fail to see how this would benefit taxpayers or advisers in any way, even in the unlikely event we could haul an unemployed person off the street and train them accordingly.

 

"If HMRC were able to investigate by looking at online bookkeeping rather than travelling to taxpayers they could do a lot more effective work.

I’m sure this could all be achieved if people wanted to make efficiencies rather than say everything is too difficult."

 

Really? I believe HMRC receive 10-11 million tax returns each year and investigate a very small (low single figure) percentage. Do you really believe that if they are provided with online bookkeeping showing multi millions of transactions they would be able to cope and this would help them?

Some people are looking at this the wrong way round and seem happy with the idea that agents should just become an extension of HMRC and we should all just happily comply with the next harebrained proposal. Surely HMRC, as Civil servants, should be consulting with the professional bodies so that a workable system is arrived at. But instead we have been provided with no concrete proposals, nor have we had it explained why annual tax returns need to be eliminated. I remember when the CIS36 (annual) return was replaced by the monthly CIS returns (twelve) and we were expected to believe this resulted in savings of over £100 million. Gibberish.

Is this really just a plan so that the self employed and those under self assessment pay tax monthly to help the UK government's cashflow?

 

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Replying to Paul Crowley:
By petersaxton
22nd Oct 2015 18:58

Elvis

Elvis11 wrote:

"Bank feeds followed by scanning documents shouldn’t be beyond most people. If they can’t scan documents then the accountant can. There’s so many people unemployed right now I don’t think it would be too expensive for accountants to employ one person to scan documents that the client provides. An accountant can then attach the receipts and code the transactions."

I fail to see how this would benefit taxpayers or advisers in any way, even in the unlikely event we could haul an unemployed person off the street and train them accordingly.

 

"If HMRC were able to investigate by looking at online bookkeeping rather than travelling to taxpayers they could do a lot more effective work.

I’m sure this could all be achieved if people wanted to make efficiencies rather than say everything is too difficult."

 

Really? I believe HMRC receive 10-11 million tax returns each year and investigate a very small (low single figure) percentage. Do you really believe that if they are provided with online bookkeeping showing multi millions of transactions they would be able to cope and this would help them?

Some people are looking at this the wrong way round and seem happy with the idea that agents should just become an extension of HMRC and we should all just happily comply with the next harebrained proposal. Surely HMRC, as Civil servants, should be consulting with the professional bodies so that a workable system is arrived at. But instead we have been provided with no concrete proposals, nor have we had it explained why annual tax returns need to be eliminated. I remember when the CIS36 (annual) return was replaced by the monthly CIS returns (twelve) and we were expected to believe this resulted in savings of over £100 million. Gibberish.

Is this really just a plan so that the self employed and those under self assessment pay tax monthly to help the UK government's cashflow?

 

This is the problem - some people only want it to benefit taxpayers or advisers. My idea would help to make the accounts correct and that would help taxpayers and the wider community. I don't think it is to difficult to train somebody to use a scanner.

What do you mean by "able to cope"? Just because there are multi millions of transactions it doesn't mean that HMRC would have to look at every transaction. It would mean that HMRC staff could consider the accounts of a business by reviewing a small sample in a few minutes rather than spending hours travelling and then searching for documents in paper form.

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Replying to Youareatit:
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By Elvis11
22nd Oct 2015 19:50

It's called capitalism

 

This is the problem - some people only want it to benefit taxpayers or advisers. My idea would help to make the accounts correct and that would help taxpayers and the wider community.

I don't understand this comment. Under the current system, I run a business, provide services in a competitive market, pay tax on my profits and support my family. My clients do the same.

You seem to be implying that we should welcome a system that will (probably, but the authorities won't tell us yet) place greater compliance requirements and costs on the client/accountant, inevitably lower productivity and profits and this will help taxpayers and the wider community. What an odd way to view things. You're not Jeremy Corbyn are you?

What do you mean by "able to cope"? Just because there are multi millions of transactions it doesn't mean that HMRC would have to look at every transaction. It would mean that HMRC staff could consider the accounts of a business by reviewing a small sample in a few minutes rather than spending hours travelling and then searching for documents in paper form.

Do you really believe that HMRC's inability to effectively police the current self assessment regime is down to the hours spent travelling and searching for documents? So they can't cope with 11 million returns each year and review samples as you suggest, but they could cope with millions and millions of transaction records. Nonsense.

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Replying to NatBee:
By petersaxton
23rd Oct 2015 04:12

Some people can't cope but other people can cope

Elvis11 wrote:

This is the problem - some people only want it to benefit taxpayers or advisers. My idea would help to make the accounts correct and that would help taxpayers and the wider community.

I don't understand this comment. Under the current system, I run a business, provide services in a competitive market, pay tax on my profits and support my family. My clients do the same.

You seem to be implying that we should welcome a system that will (probably, but the authorities won't tell us yet) place greater compliance requirements and costs on the client/accountant, inevitably lower productivity and profits and this will help taxpayers and the wider community. What an odd way to view things. You're not Jeremy Corbyn are you?

What do you mean by "able to cope"? Just because there are multi millions of transactions it doesn't mean that HMRC would have to look at every transaction. It would mean that HMRC staff could consider the accounts of a business by reviewing a small sample in a few minutes rather than spending hours travelling and then searching for documents in paper form.

Do you really believe that HMRC's inability to effectively police the current self assessment regime is down to the hours spent travelling and searching for documents? So they can't cope with 11 million returns each year and review samples as you suggest, but they could cope with millions and millions of transaction records. Nonsense.

You dont seem to understand the difference between a tax return which provides very little useful information for HMRC to assess it's accuracy and an online bookkeeping system which has the details.

You still don't seem to understand that if HMRC have access to many millions of transactions it doesn't mean they have to look at every one.

I would suggest that you are the one who is talking nonsense. Have you ever been an auditor? If so, did you say "you have millions of transactions, I can't cope!" Or did you say "I will look at a sample of transactions."

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By pawncob
22nd Oct 2015 16:47

@Peter

 

"Bank feeds followed by scanning documents shouldn’t be beyond most people. If they can’t scan documents then the accountant can."

I didn't get where I am today by standing around scanning documents to be sent to HMRC. (But I have spent many days photocopying tax returns).

 

HMRC's prepopulating attempts so far have been pitiful, and invariably inaccurate even though the figures come from a Gov. department.

 

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Replying to Wilson Philips:
By petersaxton
22nd Oct 2015 19:06

Exactly

pawncob wrote:

"Bank feeds followed by scanning documents shouldn’t be beyond most people. If they can’t scan documents then the accountant can."

I didn't get where I am today by standing around scanning documents to be sent to HMRC. (But I have spent many days photocopying tax returns).

HMRC's prepopulating attempts so far have been pitiful, and invariably inaccurate even though the figures come from a Gov. department.

The accountancy firm can employ somebody to scan documents if clients are not willing to do it themselves and they can employ somebody to prepare accounts. It's up to the firm to decide who is the best person to scan documents.

By the way, I wasn't suggesting anybody should send scans to HMRC. I was suggesting that attachments are attached to transactions in online bookkeeping and HMRC could have access to the data. I'm sure if you reread what I wrote above you may understand better.

It is quite obvious that some people are going to have difficulty in understanding simple concepts. Hopefully there will be sufficient training for people to ensure they don't get the completely wrong end of the stick whenever something knew is suggested.

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Replying to Youareatit:
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By cparker87
22nd Oct 2015 23:49

perfect world Peter

petersaxton wrote:

pawncob wrote:

"Bank feeds followed by scanning documents shouldn’t be beyond most people. If they can’t scan documents then the accountant can."

I didn't get where I am today by standing around scanning documents to be sent to HMRC. (But I have spent many days photocopying tax returns).

HMRC's prepopulating attempts so far have been pitiful, and invariably inaccurate even though the figures come from a Gov. department.

The accountancy firm can employ somebody to scan documents if clients are not willing to do it themselves and they can employ somebody to prepare accounts. It's up to the firm to decide who is the best person to scan documents.

By the way, I wasn't suggesting anybody should send scans to HMRC. I was suggesting that attachments are attached to transactions in online bookkeeping and HMRC could have access to the data. I'm sure if you reread what I wrote above you may understand better.

It is quite obvious that some people are going to have difficulty in understanding simple concepts. Hopefully there will be sufficient training for people to ensure they don't get the completely wrong end of the stick whenever something knew is suggested.

I have a client of mine operate exactly that way. All invoices attached to transactions with PO/Authority/VAT invoice.

Could the inspector use it on their visit? No. 1. Not allowed to use the computer.2. Incompetent with a computer.

Would you chuck all the older inspectors on the scrappy?

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Replying to Tom 7000:
By petersaxton
23rd Oct 2015 04:15

Perfect world

cparker87 wrote:
petersaxton wrote:

pawncob wrote:

"Bank feeds followed by scanning documents shouldn’t be beyond most people. If they can’t scan documents then the accountant can."

I didn't get where I am today by standing around scanning documents to be sent to HMRC. (But I have spent many days photocopying tax returns).

HMRC's prepopulating attempts so far have been pitiful, and invariably inaccurate even though the figures come from a Gov. department.

The accountancy firm can employ somebody to scan documents if clients are not willing to do it themselves and they can employ somebody to prepare accounts. It's up to the firm to decide who is the best person to scan documents.

By the way, I wasn't suggesting anybody should send scans to HMRC. I was suggesting that attachments are attached to transactions in online bookkeeping and HMRC could have access to the data. I'm sure if you reread what I wrote above you may understand better.

It is quite obvious that some people are going to have difficulty in understanding simple concepts. Hopefully there will be sufficient training for people to ensure they don't get the completely wrong end of the stick whenever something knew is suggested.

I have a client of mine operate exactly that way. All invoices attached to transactions with PO/Authority/VAT invoice. Could the inspector use it on their visit? No. 1. Not allowed to use the computer.2. Incompetent with a computer. Would you chuck all the older inspectors on the scrappy?

So you think HMRC don't use computers? What you are suggesting is the risk involved in using a taxpayers computer.

I'm 63. Should I be chucked on the scrapheap because of my age? Who's suggesting chucking older inspectors on the scrapheap? You are the only one who has mentioned it.

 

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Replying to Tom 7000:
RLI
By lionofludesch
23rd Oct 2015 10:10

Good Point

cparker87 wrote:

Could the inspector use it on their visit? No. 1. Not allowed to use the computer.

That's a very good point.

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Replying to whitevanman:
By petersaxton
23rd Oct 2015 10:27

Exactly

lionofludesch wrote:

cparker87 wrote:

Could the inspector use it on their visit? No. 1. Not allowed to use the computer.

That's a very good point.

So that's why they can do it from the comfort of their office or even from home.

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Replying to Wilson Philips:
RLI
By lionofludesch
22nd Oct 2015 19:49

Me neither

pawncob wrote:

"Bank feeds followed by scanning documents shouldn’t be beyond most people. If they can’t scan documents then the accountant can."

I didn't get where I am today by standing around scanning documents to be sent to HMRC. 

Me neither.

Scanning documents ?  Accountants opening scanned documents to have a look at them ?

How is that better than the client giving you the paper ?  Much, much quicker to skim through and pick out the stuff you're interested in.

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Replying to NatBee:
By petersaxton
23rd Oct 2015 04:04

What is difficult to understand?

lionofludesch wrote:

pawncob wrote:

"Bank feeds followed by scanning documents shouldn’t be beyond most people. If they can’t scan documents then the accountant can."

I didn't get where I am today by standing around scanning documents to be sent to HMRC. 

Me neither.

Scanning documents ?  Accountants opening scanned documents to have a look at them ?

How is that better than the client giving you the paper ?  Much, much quicker to skim through and pick out the stuff you're interested in.

It's better to have a scanned document which is linked to a transaction rather than having to find the document in a file. There's no need for the client to visit you with the documents or you visit the client to look at the documents or the client posting the documents to you.

Please say you understand this!

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Replying to Paul Crowley:
RLI
By lionofludesch
23rd Oct 2015 10:06

Time

petersaxton wrote:

It's better to have a scanned document which is linked to a transaction rather than having to find the document in a file. There's no need for the client to visit you with the documents or you visit the client to look at the documents or the client posting the documents to you.

Please say you understand this!

Who links the document to the transaction ?  At some point along the way, someone has to scan all those documents in there.  I know my clients won't do that - not because they can't, but because they don't have the time.

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Replying to I'msorryIhaven'taclue:
By petersaxton
23rd Oct 2015 10:26

If clients wont do it

lionofludesch wrote:

petersaxton wrote:

It's better to have a scanned document which is linked to a transaction rather than having to find the document in a file. There's no need for the client to visit you with the documents or you visit the client to look at the documents or the client posting the documents to you.

Please say you understand this!

Who links the document to the transaction ?  At some point along the way, someone has to scan all those documents in there.  I know my clients won't do that - not because they can't, but because they don't have the time.

then you can employ somebody to scan and attach the scans so you or a bookkeeper can go through the transactions and code them and then you can add a few journals and produce final accounts.

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Jennifer Adams
By Jennifer Adams
22nd Oct 2015 18:49

As Tim Vane says HMRC are looking to only permit certain agents to view certain screens in their new Digital Stregy. I wrote an article about this nearly a year ago following a WT meeting I attended when this point was raised.https://www.accountingweb.co.uk/article/will-your-firm-pass-hmrc-s-new-t...

Be advised

It has been reported that at a recent HMRC presentation on the Tax Agent Strategy, a further ‘criteria’ was indicated – that the ‘trustworthiness‘ of an agent may be questioned because of the behaviour and non-compliance of some clients.

The HMRC presenter commented that access to HMRC’s website would not necessarily be restricted but that HMRC would need to be reassured that every effort was being made to “improve the behaviour of those clients”. It has been suggested that this would lead to practitioners deciding not to represent clients with poor compliance histories. We await the outcome of discussions between HMRC and the professional bodies.

I've asked again recently and it looks as though this is something that is going to happen.

The initial restriction was to permit only those agents who are registered for VAT to view.

You might be interested in this article in Tax Journal which discusses the future of filing.

http://www.taxjournal.com/tj/articles/qa-hmrc-s-plans-working-tax-agents...

 

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Replying to Youareatit:
By taxbakbristol
24th Oct 2015 03:44

Trustworthy Agents?

I do not personally know any "untrustworthy agents " but why would I want to?

What I do know about are untrustworthy HMRC Officers who lie , cheat and bully .Yes , I have complaints in about 3 such creatures and what happens top my complaints ......NOTHING !

When I see an improvement in the way HMRC deals with Rogue Officers then I will start to consider "trustworthy agents ".

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By Tim Vane
22nd Oct 2015 19:46

For HMRC, the more data the better. They'll take it all now and analyse it at their leisure (just like Google and Tesco do).

Right now they already pull millions of data "tags" from XBRL and XML submissions (both filed with them and other places such as CH). Some stuff is simple to analyse and they already do it - for example checking that numbers add up. More complex analysis will take time, and for now they are just storing the data against the day they will be able to make use of it.

They may well not yet have written the code to analyse the breakdown of dividends declared in a company's XBRL accounts, cross reference it with the record of shareholders at CH then compare with the dividend income declared by those directors under SA. But as data analysis exercises go this is a fairly straight forward one and it will happen eventually.

They are pulling in data from more and more sources. Hidden foreign income is a favourite at the moment, with more and more data sharing agreements being signed with other states. Maybe they can't use it all yet, but storage is cheap and processing power is increasing all the time, so they can afford to wait a year or six.

HMRC admit they are targeting their ever-expanding team of data analysts at high risk areas first, and we have all heard the stories of agents being notified by HMRC that large items appear to be missing from clients returns, only for the client to say oops oh yes when the agent challenges them about it. The holes in the net will grow smaller once the big fish have been caught and the easy pickings are picked.

And the point about data granularity and accuracy is that the more data they gather the more accurate returns will have to be.  If one is given a single profit figure then there is little you can infer from it. It may be right, it may be wrong, who knows. If I breakdown that profit into turnover and some expense categories I might immediately spot an anomaly against benchmark data, but perhaps not. If I then analyse those figures still further and in more detail until I get down to individual transaction level then it becomes harder to fudge the figures.

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By cparker87
22nd Oct 2015 23:46

trustworthiness
We have a real problem here. If we are to be judged by trustworthiness who makes that judgement? HMRC? I often disagree with HMRC and their interpretations. Does that make me untrustworthy? Risky?

I dread a market where I cannot fight for the legal rights of my client for fear of being kicked out of the ' trustworthy' club and losing my business. That'll be independence and objectivity out of the window.

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By JCresswellTax
23rd Oct 2015 09:24

Peter

Did you wake up at 4am or have you not been to bed yet? :-0

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By petersaxton
23rd Oct 2015 09:36

2 am

I woke up at 2 am.

I went to bed early last night.

I may go to bed again soon. I seem to prefer sleeping for 4 hours twice a day rather than 8 hours in one go.

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By why always me
23rd Oct 2015 11:24

what is the problem?

Obtaining this pre populated information is a bug bear as client often forgets something and then it is your fault when it crops up. Taking the client out of the equation for basic compliance seems like a great idea to me

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By dmmarler
23rd Oct 2015 11:47

Cyber risk

Has anyone thought through the cyber security risks of having all this detail in one place guarded by one system (designed by HMRC and its advisers)?  Someone hacking into HMRC's systems with all the detailed personal data, individuals' personal tax, business performance and the business' commercial data and related tax, is going to make a lot of money.  It could easily be done by international criminals who would be far beyond the UK's jurisdiction but who still make a packet. 

How will individuals and UK PLC be recompensed by any failure of HMRC systems? 

TalkTalk has just had to admit to the failure of its systems to protect its customers.  What comeback are these customers going to have when their data is misused? From what I can gather, zilch. 

 

 

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Replying to gphemy:
By petersaxton
23rd Oct 2015 11:59

Why?

dmmarler wrote:

Has anyone thought through the cyber security risks of having all this detail in one place guarded by one system (designed by HMRC and its advisers)?  Someone hacking into HMRC's systems with all the detailed personal data, individuals' personal tax, business performance and the business' commercial data and related tax, is going to make a lot of money.  It could easily be done by international criminals who would be far beyond the UK's jurisdiction but who still make a packet. 

How will individuals and UK PLC be recompensed by any failure of HMRC systems? 

TalkTalk has just had to admit to the failure of its systems to protect its customers.  What comeback are these customers going to have when their data is misused? From what I can gather, zilch. 

If the systems were not reasonable I dont see why there isn't a remedy.

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Replying to gphemy:
Maytuna
By DJKL
23rd Oct 2015 12:23

Why bother

dmmarler wrote:

Has anyone thought through the cyber security risks of having all this detail in one place guarded by one system (designed by HMRC and its advisers)?  Someone hacking into HMRC's systems with all the detailed personal data, individuals' personal tax, business performance and the business' commercial data and related tax, is going to make a lot of money.  It could easily be done by international criminals who would be far beyond the UK's jurisdiction but who still make a packet. 

How will individuals and UK PLC be recompensed by any failure of HMRC systems? 

TalkTalk has just had to admit to the failure of its systems to protect its customers.  What comeback are these customers going to have when their data is misused? From what I can gather, zilch. 

 

 

Re HMRC and hacking why bother, just wait to get  the data from computer discs when they are lost in transit, no need to hack.

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By Hugo Fair
23rd Oct 2015 12:16

There'll be no "death" of the tax return ... just look at RTI

As is presumably clear from most of the above comments, the word 'death' was just part of a soundbite from the Chancellor ... in reality it's about the exact reverse:

* The claim that pre-population will remove the need to compile all your data into a submission is nonsense - as you will still need to review and confirm (or more likely adjust) the figures supplied by HMRC (by having your figures to hand), and then submit the result (which is still a tax return).

The claim is comparable to the one made about RTI that it would mean "the end of year-end submissions" - which is only true in the  sense that you now have to make similar (but more complex) submissions 12 times p.a. (or more frequently if your payroll runs fortnightly or weekly) ... AND you still have to make an E-o-Y return (if only to confirm that you have made all the returns for the year)!  Indeed HMRC's back-end systems still work on the basis of the year-end structures - simply treating the RTI submissions as in-year rolling updates.

What really concerns me is the likely inaccuracies in HMRC's data ... they very rarely get the numbers right regarding over/under-payment in previous years (which come from their own systems).  I suspect that any discrepancies to the taxpayer's advantage will remain uncorrected by the returnee, whilst the reverse will undoubtedly happen where it's to their disadvantage.  So this won't lead to an increase in accurate returns - potentially quite the reverse!

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Replying to TheMonarch:
By petersaxton
23rd Oct 2015 12:34

Not if there's agents

Hugo Fair wrote:

As is presumably clear from most of the above comments, the word 'death' was just part of a soundbite from the Chancellor ... in reality it's about the exact reverse:

* The claim that pre-population will remove the need to compile all your data into a submission is nonsense - as you will still need to review and confirm (or more likely adjust) the figures supplied by HMRC (by having your figures to hand), and then submit the result (which is still a tax return).

The claim is comparable to the one made about RTI that it would mean "the end of year-end submissions" - which is only true in the  sense that you now have to make similar (but more complex) submissions 12 times p.a. (or more frequently if your payroll runs fortnightly or weekly) ... AND you still have to make an E-o-Y return (if only to confirm that you have made all the returns for the year)!  Indeed HMRC's back-end systems still work on the basis of the year-end structures - simply treating the RTI submissions as in-year rolling updates.

What really concerns me is the likely inaccuracies in HMRC's data ... they very rarely get the numbers right regarding over/under-payment in previous years (which come from their own systems).  I suspect that any discrepancies to the taxpayer's advantage will remain uncorrected by the returnee, whilst the reverse will undoubtedly happen where it's to their disadvantage.  So this won't lead to an increase in accurate returns - potentially quite the reverse!

The agent would correct any discrepancies.

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By Ammie
23rd Oct 2015 12:59

VERY AMUSING CHAT

Now now, lets all put our claws away and wait for some accurate information.

HMRC are stretched and vulnerable in far too many areas for such changes to work much better than the current system, certainly at the outset. Yes, it may evolve into a more efficient tool, but I might be dead by then!!

To me it reaks a little of "try it and see". What ever the move we will move with it, adapt and like it!!

The unscrupulous, like IT hackers and virus spreaders, will move to the next level!!

We shall see.

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By Michael C Feltham
23rd Oct 2015 13:25

Sweet Dreams......and Pipe Dreams too!

I did some time back (August) submit to John Stokdyk a basic analysis of the core problems facing this latest lovely cloud cuckoo land concept from HMRC and Treasury. For some reason it was lost or overlooked, so I will post it here for information, critique and comment.

_________________________

Accountants are right to be deeply concerned over the issues arising from HMRC’s planned On Line Tax Accounts, announced in the Summer Budget, recently.

At a recent CPD seminar, presented by the extremely competent Martyn Ingles, he mentioned as an exemplar how Mexico has introduced this approach and cited the example of a client residing in Mexico who must quote his business registration number whenever he purchases goods or services for his company. At the point of sale, the invoice value, date and etc are captured and logged against his registration.

Now the core problem with ICT is young thrusting System Architects, i.e the people who take a clean sheet of paper and devise systems, which invariably advance well beyond realistic, whilst perhaps remaining feasible in system terms. It is called adding “Bells and Whistles”!

The key difference between Mexico and the UK is simply Mexico were late to the party in terms of digitisation and online processing, whereas Britain has used various types of mainframe computers since the 1960s: the legacy base is far too entrenched.

Martyn’s point was simply ought accountants be concerned for their livelihood in the foreseeable future?

Personally, I do not see much to worry about: why?

HMRC’s first step is already in place; forcing by statute, banks et al to allow full HMRC access to transaction records. Additionally, as Government’s intention is to create a fully digital data sharing infrastructure, various external records can be accessed, such as Companies House, Benefits, etc. However, when Government moves outside its own boundaries the task becomes inordinately complex and demanding.

Mixed types and sources of data are collated on powerful Relational Databases, using an approach called Data Mining.

http://docs.oracle.com/cd/B28359_01/datamine.111/b28129/process.htm

Now populating a dedicated database record for one person or company is not an easy or simple task, since different organisations employ wildly different systems and data sets. Often data culled from a wide range of disparate systems must be translated by the use of what are called Protocol Converters: invariably, errors and corruption arises.

https://en.wikipedia.org/wiki/Protocol_converter

One of the present real time problems is the sheer scale of numbers of different types of computer languages!

https://en.wikipedia.org/wiki/List_of_programming_languages

As we saw with Online CT returns, HMRC demanded iXBRL was used: whereas most sensible people around the World use XBRL (XBRL - eXtensible Business Reporting Language - is a freely available and global standard for exchanging business information. XBRL allows the expression of semantic meaning commonly required in business reporting).

My conclusions are firstly, the lead-time into realising roll out of a fully interactive Tax Account, populated by every necessary numerical component of income and expenditure (which presupposes every supplier of goods and services can successfully communicate transaction records direct to HMRC on a common platform and every possible person or organisation in supply chains does likewise: faint hope!) would be immense. Take just one example: assume a trader uses just one business bank account; how does HMRC distinguish between revenue and capital items? Worse, the established legacy base of EPOS and EFTPOS (Electronic Point of Sale: Electronic Funds Transfer At Point of Sale) systems would demand commonality; of data communication, language etc.

Secondly, as any accountant in practice knows full well, a majority of clients are, shall we say politely, numerically challenged when it comes to business records! The essential interface of a professional qualified adviser, who understands how profit is adjusted, is up to date on Capital Allowances and regulations will be part of the scene for many years to come.

Businesses of all sizes will still require accounts sets.

At times we are far too self-deprecating over our own core knowledge and developed expertise: imagine a tax payer trying to trawl through an FAQ on how to complete income, expenditure and profit statements, when they must take into account the anomalies of scale charges, subsistence allowances, car capital allowances with Carbon Emissions, etc! HMRC’s “Guidance Notes” remain impenetrable, clunky, confusing, perverse, stilted, pedestrian and self-conscious at best: the search facility is sterile.

If Government had taken the time to apply state-of-the-art systems (such as neural networks, expert systems or a carefully developed algorithmic basis of knowledge management), it might be a little better. However, in their desire to economise on a plethora of web footprints, even HMRC’s knowledge base is now confined to a general Government web server with far less data and search facility.

Will the tax return as is evaporate? Not in my view as what would be needed is an online active equivalent, which would prove immensely labour intensive. (As anyone realises who has struggled with HMRC’s own online offerings!).

Therefore suppliers of tax software will be around for some little time to come.

As will accountants!

Michael C Feltham

August 2015

Copyright

(Michael C Feltham was a founder and CEO of a Systems Integrator and Solution Provider and is founder and CEO of a small software house, specialising in BSPM products. He is a qualified accountant in practice and primarily, a Strategic Management Consultant, enjoying significant international experience.)

 

 

 

 

 

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By Elvis11
23rd Oct 2015 15:12

Thanks Michael

As you say, this is a "cloud cuckoo land concept from HMRC and Treasury" although I expect petersaxton will be along shortly to set you straight...

Peter, in response to your question at 4.12 am, yes, I trained as an auditor and I do understand the concept of sampling. However, there is no doubt whatsoever that HMRC are hopeless at using the information already in their possession, so I can see no possible way they would have the ability to use vastly more information effectively, even by using sampling techniques.

Two examples which confirm this:

1) In 2013, HMRC received 300,000 Suspicious Activity Reports.They admitted that they actually used just 3,500, or 1.16% which were then looked at by Local Compliance teams. It seems highly unlikely to me that 98.84% of reports were of little or no use, given that a high proportion would have come from accountants, so we can only conclude they are not making effective use of information already in their possession.

2) RTI. We were told this would enable HMRC to have real time information about taxable income and as a result PAYE over and under payments through coding errors would become a thing of the past. I have seen zero evidence that the accuracy of codes has improved at all.

Ammie is correct of course to say we all need to wait for accurate information. But in the absence of that and given the trends we have seen of more and more regulation (CIS, RTI, Auto enrolment, Anti Money Laundering regulations to name a few) I think many accountants are right to have concerns.

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Replying to SteveHa:
By petersaxton
23rd Oct 2015 15:45

Elvis11

Elvis11 wrote:

As you say, this is a "cloud cuckoo land concept from HMRC and Treasury" although I expect petersaxton will be along shortly to set you straight...

Peter, in response to your question at 4.12 am, yes, I trained as an auditor and I do understand the concept of sampling. However, there is no doubt whatsoever that HMRC are hopeless at using the information already in their possession, so I can see no possible way they would have the ability to use vastly more information effectively, even by using sampling techniques.

Two examples which confirm this:

1) In 2013, HMRC received 300,000 Suspicious Activity Reports.They admitted that they actually used just 3,500, or 1.16% which were then looked at by Local Compliance teams. It seems highly unlikely to me that 98.84% of reports were of little or no use, given that a high proportion would have come from accountants, so we can only conclude they are not making effective use of information already in their possession.

2) RTI. We were told this would enable HMRC to have real time information about taxable income and as a result PAYE over and under payments through coding errors would become a thing of the past. I have seen zero evidence that the accuracy of codes has improved at all.

Ammie is correct of course to say we all need to wait for accurate information. But in the absence of that and given the trends we have seen of more and more regulation (CIS, RTI, Auto enrolment, Anti Money Laundering regulations to name a few) I think many accountants are right to have concerns.

I would think that even small investigations would take up a lot of resources but if they had access to all transactions they could more easily judge whether they have a reason to investigate further.

HMRC take time to change their procedures. Over time I would think that code accuracy would improve.

On the whole I think most changes have been an improvement. I still think that RTI isn't perfect and it is more difficult to deal with certain errors given there is more regular reporting. Auto Enrolment is a total waste of time. A lot of extra work for no benefit at all.

 

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Replying to Paul Crowley:
avatar
By cparker87
23rd Oct 2015 17:33

Access

petersaxton wrote:

Elvis11 wrote:

As you say, this is a "cloud cuckoo land concept from HMRC and Treasury" although I expect petersaxton will be along shortly to set you straight...

Peter, in response to your question at 4.12 am, yes, I trained as an auditor and I do understand the concept of sampling. However, there is no doubt whatsoever that HMRC are hopeless at using the information already in their possession, so I can see no possible way they would have the ability to use vastly more information effectively, even by using sampling techniques.

Two examples which confirm this:

1) In 2013, HMRC received 300,000 Suspicious Activity Reports.They admitted that they actually used just 3,500, or 1.16% which were then looked at by Local Compliance teams. It seems highly unlikely to me that 98.84% of reports were of little or no use, given that a high proportion would have come from accountants, so we can only conclude they are not making effective use of information already in their possession.

2) RTI. We were told this would enable HMRC to have real time information about taxable income and as a result PAYE over and under payments through coding errors would become a thing of the past. I have seen zero evidence that the accuracy of codes has improved at all.

Ammie is correct of course to say we all need to wait for accurate information. But in the absence of that and given the trends we have seen of more and more regulation (CIS, RTI, Auto enrolment, Anti Money Laundering regulations to name a few) I think many accountants are right to have concerns.

I would think that even small investigations would take up a lot of resources but if they had access to all transactions they could more easily judge whether they have a reason to investigate further.

HMRC take time to change their procedures. Over time I would think that code accuracy would improve.

On the whole I think most changes have been an improvement. I still think that RTI isn't perfect and it is more difficult to deal with certain errors given there is more regular reporting. Auto Enrolment is a total waste of time. A lot of extra work for no benefit at all.

 

 

You do know that HMRC can already access many data resources right? I believe they have or will shortly have access to bank accounts to assess income/spend. 

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