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Making tax digital is here!

Making tax digital is here!

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It's here. The government released "Making tax digital" today. In his foreword, David Gauke outlined the following objectives: "By 2020, HMRC will have moved to a fully digital tax system where:

  • bureaucratic form-filling is eradicated — taxpayers should never have to tell HMRC information it already knows;
  • unnecessary time delays are eliminated — the tax system operates much more closely to ‘real time’, keeping everyone up to date and removing the risk of missed deadlines, unnecessary penalties, debts arising and errors in the system being carried forward from one year to the next; and
  • taxpayers have access to digital accounts — with the information HMRC needs automatically uploaded, bringing an end to the tax return." 

Notable from first glance, for me at least, is HMRC's indication  that payment dates are to be brought forward: "The government is consulting on options to simplify the payment of taxes, including whether to align payment dates and bring them closer to the point when profits arise."

Going into this consultation at this time of year also seems a little obtuse. 

What's your take?

Replies (21)

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By Tim Vane
14th Dec 2015 11:23

I read it before going to bed last night. I didn't think there was anything in it that we didn't already know from what has been said previously. My take is that there is still not enough detail to know anything useful.

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AS
By AS
14th Dec 2015 11:25

Digital!

RTI is a good example of what the digital tax system will look like...

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By johngroganjga
14th Dec 2015 12:12

All very well for information that is in HMRC's possession already - PAYE especially.

But what about information that by its nature won't be in HMRC's possession unless and until they ask for it? How are those income and gains ever going to be taxed if HMRC don't require taxpayers to make a "return" of them and "self-assess" them? 

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By cstwragby
14th Dec 2015 12:40

Once it comes in and becomes second nature, I think it might be a positive, clients will HAVE to give us their records once a quarter rather than this nightmare every December and January chasing up disorganised people to bring in their records.

A bit like PAYE, no more having to chase information by 19th May every year.

All clients will in effect be treated like VAT registered clients.

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Time for change
By Time for change
14th Dec 2015 12:58

So clients will conform to the new rules?

cstwragby wrote:

Once it comes in and becomes second nature, I think it might be a positive, clients will HAVE to give us their records once a quarter rather than this nightmare every December and January chasing up disorganised people to bring in their records.

A bit like PAYE, no more having to chase information by 19th May every year.

All clients will in effect be treated like VAT registered clients.

Or, will we just have to remind client's four times each year?

HMRC is a complete pigs ear and, has been for some time now. Not only does the agency "require improvement" it is seriously inadequate.

The strategic plan will require more than good intentions to become reality.

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By cstwragby
14th Dec 2015 13:02

Workload spread out

Time for change wrote:

cstwragby wrote:

Once it comes in and becomes second nature, I think it might be a positive, clients will HAVE to give us their records once a quarter rather than this nightmare every December and January chasing up disorganised people to bring in their records.

A bit like PAYE, no more having to chase information by 19th May every year.

All clients will in effect be treated like VAT registered clients.

Or, will we just have to remind client's four times each year?

HMRC is a complete pigs ear and, has been for some time now. Not only does the agency "require improvement" it is seriously inadequate.

The strategic plan will require more than good intentions to become reality.

Yes more admin for us, but a more regular cashflow (and increased fees?) rather than the top-heavy December and January income

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By johngroganjga
14th Dec 2015 12:47

But that doesn't answer my point. If tax returns are being abolished how will income and gains which HMRC don't know about unless they are told be taxed?

Or is the so-called abolition of tax returns just misleading spin? Is the truth perhaps that the reporting interval is being shortened from 12 to 3 months, so that the number of tax returns will quadruple?

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By cstwragby
14th Dec 2015 12:58

A bit like the headline NO MORE P35s but then weekly/monthly submissions instead!

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By SteLacca
14th Dec 2015 13:04

It's still self-assessment.

johngroganjga wrote:
But that doesn't answer my point. If tax returns are being abolished how will income and gains which HMRC don't know about unless they are told be taxed?

 

From page 10 of the document, "Of course, taxpayers will still be responsible for ensuring that their tax bills are right and telling HMRC about information that is not reported through other means. But digital accounts will make this much easier, quicker and simpler."

 

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By johngroganjga
14th Dec 2015 13:19

Deadlines

SteLacca wrote:

"Of course, taxpayers will still be responsible for ensuring that their tax bills are right and telling HMRC about information that is not reported through other means. But digital accounts will make this much easier, quicker and simpler."

Thanks - so far so good then. But what will (a) the reporting intervals and (b) the deadlines be? Currently we know that (a) is 12 months and (b) is just under ten months after the end of the reporting period.

As to digital reporting being quicker and simpler, well we have it already don't we (except for some self-represented taxpayers who still file on paper)?

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Time for change
By Time for change
14th Dec 2015 13:09

I would agree with cstwragby above

there are obviously opportunities for the profession.

However, this isn't the panacea, which the Government and HMRC would have the public believe.

Remember, the majority of Joe Public still think that HMRC are always right!

In the spirit of the festive season..........Oh no they're not!

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By Hugo Fair
14th Dec 2015 13:31

The tax may be digital but my account isn't ...

Irrespective of the (admittedly important) likelihood of correct data being held/accessed by HMRC - or the frequency of 'reporting' - there's a basic requirement for any of this to work ... namely registering under HMRC's Verify service.

This is supposed to take about 10 minutes, but has consumed the last 4 hours of my life ... without success!

Despite providing my passport details, address details (where I've lived for over 40 years), bank account and credit card details - the Experian software also wanted answers to 'lifestyle' queries ... such as my mobile 'phone supplier/contract.  Not only does this feel invidious (they seem to feel this is an opportunity to collect any data about me that they feel like requesting) ... but it brought my attempt to register to a dead-end (as I've never possessed a mobile phone)!

Their helpline was of absolutely no use (what else would you expect of Experian) - they simply tried to sell me a copy of my 'credit report' (which I have no interest in as I don't borrow money).

I happen to be fully IT-savvy (I even design similar, but better, applications than the one under Experian's badge) ... but they have no concept that not everyone has a photo driving-licence AND a mobile-phone AND current loans (and everything else that they want from a consumer).

The moral?  If you want to try registering, do NOT use Experian (the others may be better for all I know) ... but expect a number of your clients to be unable to join the digital tax revolution!

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By adam.arca
14th Dec 2015 13:46

Credit referencing b*stards

Hugo Fair wrote:

the Experian software also wanted answers to 'lifestyle' queries ... such as my mobile 'phone supplier/contract.  Not only does this feel invidious (they seem to feel this is an opportunity to collect any data about me that they feel like requesting)

I recently had to stand as guarantor for my son's student rent.

The credit reference form I had to complete was absolutely a blatant attempt by Experian to gather much more information about me than would ever be required for the task in hand.

If we're all going to have to be "verified" and the only reason is HMRC requirements, then HMG need to step in and tell these little fascists to stop treating these opportunities (which they are getting paid for) as the chance for a nice little bonus of free info for them to sell on. Won't be holding my breath on that one, unfortunately.

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Francois
By Francois Badenhorst
14th Dec 2015 14:58

Me too!

Hugo Fair wrote:

Irrespective of the (admittedly important) likelihood of correct data being held/accessed by HMRC - or the frequency of 'reporting' - there's a basic requirement for any of this to work ... namely registering under HMRC's Verify service.

This is supposed to take about 10 minutes, but has consumed the last 4 hours of my life ... without success!

Despite providing my passport details, address details (where I've lived for over 40 years), bank account and credit card details - the Experian software also wanted answers to 'lifestyle' queries ... such as my mobile 'phone supplier/contract.  Not only does this feel invidious (they seem to feel this is an opportunity to collect any data about me that they feel like requesting) ... but it brought my attempt to register to a dead-end (as I've never possessed a mobile phone)!

I can attest to this. I also registered last week. It took well beyond the advertised ten minutes and it was bit of a headache. I can't imagine some less digitally inclined citizens are going to find this very easy. 

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RLI
By lionofludesch
14th Dec 2015 15:15

Quite like ......

I quite like the comment that "most companies already manage their tax digitally - 98% of Corporation Tax returns and 99% of VAT returns are already submitted online".  

It's like companies had a choice, so it is.

Great example of Government Spin.

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By bernard michael
14th Dec 2015 16:24

I don't believe there are enough accountants to mop up the extra work caused by 4/5 return submissions. Also a lot of clients cannot seem to be able to provide information once a year let alone 4 times. HMRC certainly won't be able to cope with the increased telephone query call rate - or will they just cut people off. I don't believe this nonsense idea will actually come to fruition

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RLI
By lionofludesch
14th Dec 2015 16:51

David Gauke needs to spend a bit of time at the sharp end, fielding calls in a call centre, perhaps.

He has no idea.

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By ireallyshouldknowthisbut
14th Dec 2015 17:15

.

The main reason for all of this is quite transparent.

They are looking (as it says in the document) to 'consult' on bringing forward payments to "in year" as opposed to 9 months after the year end.  

This would at a stroke cut the budget deficit, or at least allow Gideon to forecast a substantial cut in it, which is the most important thing come election time, given the  "cash accounting" for gov. coffers. 

Bugger[***] how much work its going to be, or the cashflow issues it will create, that is not important.  Gideon's forecasts in 2020 are the key thing, and the illusion of the gov. debt falling.

In terms of work, its going to be a heck of a lot of it, not least of it in the transitional period from "arrears" to "in year".  The big questions are going to be "how good" they need to be, or if we can simply bang any old crap in quarterly (eg last years data divided by 4, press button every 3 months), and have a final 'mop up' session in due course.  Also of relevant will be " how long?".  Will everyone be on the same quarter?  If everyone is on June/Sept/Dec/March and you get 30 days to file it would be "interesting" to say the least. 

Its all going to be complicated for those at the sharp end.  It will make pensions seem like a nice day in the park. 

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RLI
By lionofludesch
14th Dec 2015 21:35

Helpful ?

ireallyshouldknowthisbut wrote:

The main reason for all of this is quite transparent.

They are looking (as it says in the document) to 'consult' on bringing forward payments to "in year" as opposed to 9 months after the year end.  

Quite.  So how will it help businesses to pay two* years' tax in one year ?

 

* Or however many years it ends up being.

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By The Innkeeper
14th Dec 2015 19:33

And will our clients
Swallow the extra costs. Oh silly me we have got to do more work without charging for it.

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By North East Accountant
15th Dec 2015 09:19

Fantasy Land

HMRC live in a complete fantasy land where everyone is IT savvy and can press a button at the end of a quarter to file their returns. Don't forget they said "at least quarterly" so they probably plan to go to monthly.

One of the major advantage of once per annum accounts is that they are backward looking. They can be prepared in a meticulous and considered manor with through review of the previous years transactions and correction of any client book keeping mistakes (plenty of those).

With quarterly submissions you won't have time to review and consider just lash it in ad move on to the next one etc etc. With the online providers doing it for next to nothing there will massive pressure on fees to do much more wok or less money.

That's apart from the shambles HMRC will clearly make of the whole thing.

 

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