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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Replying to PeaBK:
By petersaxton
23rd Oct 2015 17:42

Many data resources?

cparker87 wrote:

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. 

I wouldn't call it many.

Presently they don't have the systems in place to run comparisons from one source to compare it with a taxpayers return. They have to do it as a separate exercise. In future they will populate the tax account directly.

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Replying to memyself-eye:
avatar
By cparker87
23rd Oct 2015 19:35

Connect

petersaxton wrote:

cparker87 wrote:

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. 

I wouldn't call it many.

Presently they don't have the systems in place to run comparisons from one source to compare it with a taxpayers return. They have to do it as a separate exercise. In future they will populate the tax account directly.

 

Take a look at HMRC's Connect system. 

Irrelevant to our discussed points but you might also want to read the Finance Bill 2015 (No2) that sets out the ways in which HMRC can alleviate you of money from your own bank account.

Seems to me tha

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By cparker87
23rd Oct 2015 17:34

AE

Also,

 

How can AE be a total waste of time? Isn't its intention to help in plugging the pension gap?

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Replying to Vladka:
By petersaxton
23rd Oct 2015 17:47

But it wont

cparker87 wrote:

Also,

How can AE be a total waste of time? Isn't its intention to help in plugging the pension gap?

If you change employers then you will have some money in a separate pension scheme for each period of employment. The administrative costs will be enormous. The costs to the employers will be large for the small employers.

Have you looked into the practicalities of AE or have you relied on the rubbish that has been spouted?

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Replying to memyself-eye:
avatar
By cparker87
23rd Oct 2015 19:35

AE

petersaxton wrote:

cparker87 wrote:

Also,

How can AE be a total waste of time? Isn't its intention to help in plugging the pension gap?

If you change employers then you will have some money in a separate pension scheme for each period of employment. The administrative costs will be enormous. The costs to the employers will be large for the small employers.

Have you looked into the practicalities of AE or have you relied on the rubbish that has been spouted?

AE is, with respect, a bit of a storm in a tea cup. Employees with pensions have had to transfer schemes for many years. That is not part of my business and I don't concern myself with it and can't really comment upon the difficulties of transferring schemes. What I do know is that compliance is not a significant burden looking at things pragmatically, from a pensions gap perspective, cash in a pot is better than a void and so my point still stands. 

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Replying to jonharris999:
By petersaxton
23rd Oct 2015 22:54

Many better ways

cparker87 wrote:

petersaxton wrote:

cparker87 wrote:

Also,

How can AE be a total waste of time? Isn't its intention to help in plugging the pension gap?

If you change employers then you will have some money in a separate pension scheme for each period of employment. The administrative costs will be enormous. The costs to the employers will be large for the small employers.

Have you looked into the practicalities of AE or have you relied on the rubbish that has been spouted?

AE is, with respect, a bit of a storm in a tea cup. Employees with pensions have had to transfer schemes for many years. That is not part of my business and I don't concern myself with it and can't really comment upon the difficulties of transferring schemes. What I do know is that compliance is not a significant burden looking at things pragmatically, from a pensions gap perspective, cash in a pot is better than a void and so my point still stands. 

There are many better ways of saving for retirement. If you are a low paid employee I would suggest that after charges are taken into account you will end up with no more income than if you saved the money in a bank account. I think property is a better way to save for retirement.

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Replying to Paul Crowley:
avatar
By cparker87
24th Oct 2015 10:01

depends

petersaxton wrote:

cparker87 wrote:

petersaxton wrote:

cparker87 wrote:

Also,

How can AE be a total waste of time? Isn't its intention to help in plugging the pension gap?

If you change employers then you will have some money in a separate pension scheme for each period of employment. The administrative costs will be enormous. The costs to the employers will be large for the small employers.

Have you looked into the practicalities of AE or have you relied on the rubbish that has been spouted?

AE is, with respect, a bit of a storm in a tea cup. Employees with pensions have had to transfer schemes for many years. That is not part of my business and I don't concern myself with it and can't really comment upon the difficulties of transferring schemes. What I do know is that compliance is not a significant burden looking at things pragmatically, from a pensions gap perspective, cash in a pot is better than a void and so my point still stands. 

There are many better ways of saving for retirement. If you are a low paid employee I would suggest that after charges are taken into account you will end up with no more income than if you saved the money in a bank account. I think property is a better way to save for retirement.

That depends on the charges basis doesn't it. If it is a % of the fund it may not be as significant as thought.

I think the point of AE is to ensure all workers are saving something for their retirement. I do see it as another tax on employment. However I can also see that everyone saving even a little is better than only some saving for their retirement.

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By Michael C Feltham
23rd Oct 2015 19:39

Agree:

@petersaxton

I have carefully drilled down into the core realities of AE for smaller income employees.

Please check the numbers, yourself.

Anyone today, with a reasonable job, will enjoy an occupational pension. OK: not anywhere as good as the non-contributory pensions of yore.

However, for low wage employees, the AE statutory amounts are utterly derisory. Management fees will eat up much of the resulting pension pot. One client's case, for example, had a man of 50 who would enjoy the municifent benefit of 2% personal contribution and 1% from the employer. he could grow fat on this!

Not......

As I do, my practice manager and I attended an early AE seminar (3 hours useful CPD brownie points!) given by the pension guru of a major assurance and pension provider. Mixed group, accountants, solicitors and  intermediaries.

When the presenter revealed that NEST funds would be held and invested in (wait for this!) INDIA, by a subsidiary of TATA. You know, the nice company which has just shuttered the UK steel plant.

The meeting broke up into catcalls and howls of derision!

 

 

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By petersaxton
24th Oct 2015 04:07

Untrustworthy

I think untrustworthy agents don't mix with the trustworthy agent community so I'm not surprised you wont know of any.

I don't have any experience of HMRC staff who "lie, cheat and bully" but I did disagree with HMRC once about a VAT issue. I thought my point was perfectly reasonable but a chain of HMRC staff disagreed with me so I took it to a tribunal. The day before the date set for the tribunal I received a letter that said that HMRC had reviewed the case and they accepted my position!

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Replying to tom123:
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By cparker87
24th Oct 2015 09:51

and

petersaxton wrote:

I think untrustworthy agents don't mix with the trustworthy agent community so I'm not surprised you wont know of any.

I don't have any experience of HMRC staff who "lie, cheat and bully" but I did disagree with HMRC once about a VAT issue. I thought my point was perfectly reasonable but a chain of HMRC staff disagreed with me so I took it to a tribunal. The day before the date set for the tribunal I received a letter that said that HMRC had reviewed the case and they accepted my position!

If they had the power b to subsequently brand you untrustworthy causing your business severe detriment would you have defended your client so strongly?

Many would think twice.

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Replying to whitevanman:
By petersaxton
24th Oct 2015 10:09

Why not?

cparker87 wrote:
petersaxton wrote:

I think untrustworthy agents don't mix with the trustworthy agent community so I'm not surprised you wont know of any.

I don't have any experience of HMRC staff who "lie, cheat and bully" but I did disagree with HMRC once about a VAT issue. I thought my point was perfectly reasonable but a chain of HMRC staff disagreed with me so I took it to a tribunal. The day before the date set for the tribunal I received a letter that said that HMRC had reviewed the case and they accepted my position!

If they had the power b to subsequently brand you untrustworthy causing your business severe detriment would you have defended your client so strongly? Many would think twice.

Most people would do what is right. In the particular case nobody was accused of doing anything wrong. I was disagreeing about the basis of working out penalties for late payment.

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