HMRC online tool riddled with issues
The chairman of the ICPA Tony Margaritelli has blasted HMRC’s ready reckoner tax tool for the self-employed as being “so full of flaws and assumptions it’s dangerous”.
The online tool attempts to help micro businesses and the self-employed budget for their self-assessment tax bill. It’s very simplified, requiring only two inputs from the user: their net profit and whether it’s monthly or weekly.
But Margaritelli feels the checker is a dangerous over-simplification. “Lovely clean page on the site, put in your figures and there you go, you get a nice little answer,” said Margaritelli. “However, I’m going to hazard a raging guess and say the people that are likely to be looking at that are new start-ups and fledgling businesses trying to get an idea for their tax.”
Margaritelli cites payments on account as an example of where the tool falls flat. “You look at the calculator and you say ‘ooh, I’m gonna end up with a tax bill of x’ – but it doesn’t say ‘Don’t forget! You’re gonna have to pay all in one go and then you’re gonna have to pay half of it as a payment on account’.”
According to Margaritelli, the tool is indicative of a lack of understanding of micro-businesses and the self-employed. “This has been done by someone who clearly has never sat across a desk from a newly started self-employed tax payer,” said Margaritelli. “As an accountant, you would sit there and have a checklist that you would take them through. You’d help the business owner to understand what is and isn’t deductible in relation to their business.
“You don’t just say to him ‘oh you want an idea on your tax; oh it’ll be approximately that’. It’s actually far more dangerous than not knowing.”
The checker does have a caveat at the bottom which states: “HMRC cannot be held liable for incorrect output from this calculator”. But for Margaritelli, the statement itself is part of the problem. “I have a PI policy – does the revenue have one? It’s no good just tacking a bit at the bottom saying, ‘you can use this, but it may be wrong’.
“The revenue doesn’t have that concern, so they can just say ‘put in what your profits are’ with no cognisance of whether the person even knows what profit is?”
The checker’s over-simplicity may be a reaction to HMRC’s concerns over the taxpayer’s technological capabilities. A recent report from HMRC’s customer insight and knowledge team found a lack of internet access and skills among almost two in five taxpayers, and 42% of self-employed tax payers fell into the “assisted digital” bracket, where they are expected to need some assistance to interact with the government online.
But Margaritelli doesn’t believe the checker is the right way to address these concerns: “Wouldn’t it be grand to just be able to reduce our tax system to half a paragraph?” said Margaritelli. “But because of the potential that I can be sued left, right and centre, I have to go into a lot of detail so you don’t expose people to risks, including yourself.”