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Chancellor calls time on annual tax return

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18th Mar 2015
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Chancellor Osborne announced in today's Budget 2015 speech that the annual tax return is set to be phased out within five years.

The revelation was leaked this morning but fleshed out in detail during the hour-long speech. It's outlined in the government document 'Making Tax Easier'.

HMRC will instead collate the tax affairs of taxpayers from employers, banks, investment firms and other third parties into a single, digital tax account.

For businesses, HMRC and Companies House will be streamlining the process to register a new company and sign up for taxes by May 2017. 

In addition, during the summer the government will consult on a new payment process to enable tax and NICs to be collected through digital accounts instead of self-assessment.

By early 2016, all of the UK’s 5m small businesses and the first 10m individuals will have access to their own digital tax account.

The Chancellor said the move will reduce the time it takes to deal with HMRC from an average 40 minutes a year to 10 minutes. The changes will mean receipts and documents won't have to be collected by taxpayers throughout the year.

According to David Gauke, financial secretary to the Treasury, this is one of the "biggest ever changes to the way that people manage and pay their taxes".

Some AccountingWEB members are split in opinion about this change. Some are worried that it will drive business away from accountants, and others say that it will create more work. 

Commenting on an Any Answers post this morning, Shogun said: “Hopefully, small business owners will still need us to save tax. I doubt that they can scrap tax returns for traders because of the expenses. If they do try to do that, it will create unprecendented chaos and more work for them which they don’t want.

"Without accountants the tax system will collapse."

ACCA's head of tax Chas Roy-Chowdhury said giving taxpayers a "holistic view" of the tax they pay is welcome news. 

But, it must be done properly. 

He said the announcement "is part of the government’s push to get the tax payer to do more as HMRC’s resources continue to be squeezed by 5% cuts year on year. A change of this magnitude must be properly planned to ensure there are no problems with the roll out.

"It is imperative the public are able to embrace the move to a digital tax future if the government aer to be successful in this scheme."

In particular, those still filing paper returns must be given the right tools, support and guidance to transition to digital to ensure they are not left behind.

AccountingWEB tax policy editor Rebecca Cave took a sceptical stance: “We know with RTI that when information it gets to HMRC it goes through a series of Chinese whispers and ends up different to what you submitted.

“If that can go wrong with PAYE data, imagine what else could happen. They’ll put that in an electronic account and tax you on it without you signing anything. They do seem to be trying to run before they can walk, because we know it doesn’t work at the moment.”

There are many questions still unanswered, such as one posed by Jennifer Adams: "How will this tie in with the new penalty system?" Rebecca Benneyworth commented that this policy will require a "big" consultation.

AccountingWEB will be keeping a close eye on this for further developments.

Replies (97)

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Replying to ohgoodgodno:
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By Jekyll and Hyde
19th Mar 2015 12:20

eyes wide open

EasyTaxWMid wrote:
One threat that was pointed out to me some time ago - was software companies offering dirt cheap end of year services (which has happened) as they have (in the cloud) the majority of the information already. This threat could be overstepped completely by the removal of the returns all together ha ah. Regardless of my forum name (an old company I owned), I am an accountant & my concerns stretch for the entire field. The hand-held software is where the threat is at, which is directly mentioned in future proposals. Most small businesses require simple bookeeping, simple accounting/tax work @ EOY. I heard a software company once (who were preparing to offer a solution to the requirement for UTC) state that capital allowances were the issue HMRC was going to deal with, so as to enable monthly reporting. If you read my earlier posts, you can see that the concept is possible to eliminate external accountants. Advice? Well there is always advice, but advice is not repeat fees & projected income for a practice. Once you have advised someone to go on the FRS & they are doing all the work themselves - that's it! Thanks & goodbye. I hear HMRC are going to ramp up YouTube educational videos & advice emails ( pushing flat rate allowences) more & more anyway (which they are already doing). Software companies could easily mop-up the confused stragglers anyway with in-house accounts staff. I am sure people think I am a pessimistic lunatic, but my eyes are very, very open to the consequences of this move. Never forget, accountants are the LEGAL nemesis to those who wish to collect maximum tax revenues. They tie our hands with threats & MLR responsibilities on one side, while slowly & very surely pushing the knife of obsoletion into our backs on the other. Think about it.

Cannot disagree with you at all, equally my eyes are also wide open. Just had a networking friend just post on Facebook that she has now started using quick file to do bookkeeping and how wonderful it is. Small Ltd company, 3 or 4 trades under one umbrella but making a small profit. Her accountant responded positively on post however the termology used clearly identified that she understood she had lost this client, not now but its coming. Why? Quickfiler will offer a service of producing own micro entity accounts and ct filing for say £200. Who wouldn't use it?

So as a pprofession we need to start seeing how we can help or get out of Ed's kitchen!

I posted some time ago that we are having a part time profession.

 

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Replying to Elvis11:
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By Sheepy306
19th Mar 2015 12:31

Clients who don't value a professional's expertise

Jekyll and Hyde wrote:

[Cannot disagree with you at all, equally my eyes are also wide open. Just had a networking friend just post on Facebook that she has now started using quick file to do bookkeeping and how wonderful it is. Small Ltd company, 3 or 4 trades under one umbrella but making a small profit. Her accountant responded positively on post however the termology used clearly identified that she understood she had lost this client, not now but its coming. Why? Quickfiler will offer a service of producing own micro entity accounts and ct filing for say £200. Who wouldn't use it?

Ummmm.......who wouldn't use it? Anyone who understands that an accountant that is any good can save you far more. To be honest if that client thinks that they can save money (in the whole scheme of things) by doing it themselves then they were probably only prepared to pay a very nominal fee to their accountant in the first place. I suspect that (ex) accountant probably isn't too demoralised and will have some time on their hands to gain a slightly better client going forwards.

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By cheekychappy
19th Mar 2015 08:21

Standby
I think we should all be expecting phone calls from clients who think they will now be taken out of self assessment.

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By fionamcke
19th Mar 2015 10:11

Simplification?

Since when has any government 'simplification'  brought anything but complication?

Actually it sounds hugely complicated and anyone who trusts HMRC to get it right is deluded.

PS I like  the 'average' time spent dealing with is 40 minutes. That's how long you spend waiting on one phone call.

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By JoandToby
19th Mar 2015 10:40

So will most small accountancy practices switch to a monthly billing system for their clients?

Most of ours are annually billed for accounts and tax returns.

Seems like there will be more administrative work involved in keeping up with all that.

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Jennifer Adams
By Jennifer Adams
19th Mar 2015 10:54

We should have seen this coming...

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

'The demise of the £100 penalty'

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

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

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

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

So it looks as tho we are moving towards an RTI-type method and CIS-type penalties?

On hearing that the annual return is to be abolished my first feeling was one of shock and then relief (I can have my Christmas back!) but then worry... does this mean monthly returns for all my self employed clients who are not VATable and have to be nagged to get an annual return in one time? We dont know.

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

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By youngloch
19th Mar 2015 11:03

Where does it say this is compulsory?!

How many of you have actually read the HMRC document? It's more of a mission statement than an introduction to a new system.

Phrases like "those with more complex tax affairs will be able to declare income and pay tax in year." - doesn't say will have to and many/most want to hold onto their cash longer in the real world. The idea of compulsory monthly submissions is a nonsense - it would create a huge uplift in accountant's fees and mean that 31 Jan would be replaced with 31/1, 28/2, 31/3, 30/4....not going to happen!

"option to pay as they go" - it's an option

"most businesses will simply log-in to check their details with no need to send an annual return" - most not all

"Those which pay more than one tax (such as Corporation Tax, VAT and PAYE) will be able to take a single view of their total liabilities across all taxes" - hold on a minute isn't this already there and called the Business Tax Dashboard?

"Taxpayers will be able to let agents manage their digital account on their behalf if they wish"

"Of course taxpayers will still be responsible for ensuring their tax bills are right and telling HMRC about information that is not reported by other means" - e.g their accounts!

Unfortunately I don't have the HMRC letters issued in 1995/1996 warning that the new self assessment system was coming but all I can say with certainty is that here we are (and stlll will be in 2019) with taxpayers being able to file paper returns 22 years after the roll out.

Online options grow and uptake of new methods of giving information get taken up more and more each year.

In 1997 the way that things are done now would have made us all panic and declare that doomsday was approaching for the profession.

At the end of the day our clients use us as they do not have the time/desire to do it themselves.

We just need to make sure we embrace any changes and, as per usual, end up understanding the reality of the requirements in the REAL world, better than many of our HMRC colleagues.

BUT nowhere does this release communicate to me that our day to day jobs are about to completely change. Certainly no more than it has already since 1997.

Self Assessment isn't dying - the method of submission is, that's all and, in reality Tax Calc etc will do most of it automatically anyway!

 

And as for the idea that the banks might offer this as an add-on service..... really?!?!? Let's assume they do for a moment for the most simple clients - how much will they charge for this service?! It won't be free and I bet it won't be £10 a month - I also bet it won't be cheaper than us and won't provide all the other support we give when other things go wrong.

Also, unless HMRC ban the use of cash in businesses then how on earth would that ever work in practice. No it just won't happen - clients like to have control and having their own accountant to advise and act in their best interest is what they choose to pay for.

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By wyoming
19th Mar 2015 10:57

Will anything change that much?

Presumably pre-population of parts of the "return" will only happen if you are using HMRC's own software. Most accountants don't use that software because it can't cope with various complications (e.g. partnerships). So we're back to the current situation - clients can't (or don't want to) manage their own TRs so they get us to do them and we use proprietary software so we'll need to gather all the information as now. HMRC software will be useful in that we will be able to start the TR process using it, pick up all the pre-populated info and then abandon it and use our own (better) software to complete the return. As I say, not that much different to now. The cynical side of me says that George's "spreading payments" idea is really just a way of getting people to pay earlier than they are required to do at the moment.   

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Replying to [email protected]:
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By daveforbes
23rd Mar 2015 08:07

Pre-population

wyoming wrote:

Presumably pre-population of parts of the "return" will only happen if you are using HMRC's own software. Most accountants don't use that software because it can't cope with various complications ....

Pre-population will be available in 3rd party software too.

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Replying to [email protected]:
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By daveforbes
23rd Mar 2015 09:15

Pre-population

wyoming wrote:

Presumably pre-population of parts of the "return" will only happen if you are using HMRC's own software. Most accountants don't use that software because it can't cope with various complications ....

Pre-population will be available in 3rd party software too.

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Jennifer Adams
By Jennifer Adams
19th Mar 2015 10:59

Banks used to do personal tax returns.

Jekyll and Hyde says:

My biggest fear, and something I was informed about in 2007, is that the main threat to qualified accountants isn't unqualified accountants but banks.

Years ago when I was a temp I worked in Exeter for Lloyds Bank doing personal tax returns for savers as an add on to their Wealth Portfolio service. They did away with the service under the bank and now Ernst and Young do it for them.

 

 

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By Gimlet2008
19th Mar 2015 11:18

Has book keeping changed ? Has or will HMRC be less nasty

 

Very interesting debate.

Here is my straw man for shooting down please ( as I'd like to be wrong!) Please bear in mind that we operate in central London where people are exceedingly time poor, but not sure this makes as much difference as I thought before. 

My suggestion is that the scale of any change affecting us between now and 2020 and indeed beyond may hinge on two things being the case. Principally  : 

1. Book keeping has or will be greatly  simplified with technology. 

Up until now even in the smallest business most owners in our experience have not historically wanted to do the books. Reasons being that it has been time consuming, and when you get to any size clunky, you need to reconcile accounts etc and not leave them. And they think they will stuff them up. So it gets done by Joan part time or handed to us. 

If this is itself changing and I think it possibly is then small scale book keeping will be driven down cost wise quite considerably and we will see a consolidation. This might mean Joan loses out to us or we both lose out to the software. I feel it is the latter. That is the software will be the only real long term gainer. 

2. HMRC will need to stop being so confrontational

At the moment even if (1) above is true the other things you can get wrong in your return, like granny forgetting the odd  bit of interest out come the viscous letters. They will have to get more collaborative and tone things down. No sign of that yet but it could happen as an earlier poster has said. Particularly when the under 30s who have been trained to collaborate with everyone and not be confrontational start getting more positions of power and influence. 

Are the above  pivotal to how things pan out between  now and 2020. If yes I can sort of see the direction of travel, and I would suggest its probably only technology that is the winner but I am open to have this straw man shot to pieces as I'd like to be very wrong ! I have a feeling that we are seeing some real change start to happen. 

 

 

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By tea lover
19th Mar 2015 11:32

Lenders?

Any ideas how lenders will react to this news? Will they rely on info submitted by the individual or will they require verification from a qualified accountant? I don't think lenders will want to go back to self certified income, that was part of the cause of previous problems where borrowers could not repay their debts.I wonder if they will make any representations to Government or indeed to potential borrowers as to the information they will require. I think the SA302 may go out of the proverbial window as far as they are concerned as they will not be able to place any degree of reliance on them if the figures were submitted by the potential  borrower,but then again, how would they know???  I think in this type of scenario lenders would require copies of annual accounts and will pay close attention to who prepared them. Accountants certificates may therefore come back into favour!!!

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By EB
19th Mar 2015 11:36

Once a Month Self Assessment, where is he coming from?

While I applause the idea behind no tax returns for the self employed, it cannot possibly work, as there appears to be an assumption that all purchases will be 'business' and that none will be paid for by CASH! Also who will decide which of those purchases are for business and which are private? (for example fuel, property overhead costs?). Who is going to apportion percentages against private use of telephones, farm properties, electricity use etc. etc.) 

Who manages the Capital Allowances etc. etc. etc.! This is not a well thought out plan, but there's a surprise!

Farmers are now being given 5 years to average, how is HMRC going to deal with that one!

Most accountants have a difficult enough time getting clients to bring their paperwork once a year, I dread to think how they are going to get clients to bring it once a month!

How are things like Capital Gains (Losses) going to be added to this Tax Return, when are the clients going to be billed for their tax liability - monthly? What about those that work in a seasonal business.

I could go on, but I am sure you get the gist.

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Replying to insolventnl:
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By EasyTaxWMid
19th Mar 2015 11:55

Fixed rate allowances
HMRC said at a software consultation the desire to use fixed rate allowances & push toward mileage claims. Who knows though. They hate mileage on the other hand half the time. Cash - will always be a sticking point, even if they force people into business bank accounts etc. Smart phones can be used as mileage trackers, etc. I am thinking about how to respond to the potential changes, maybe doing a morning a month with LTD clients or something & take over more of the process for them ( ent much point paying me of they're doing away with end of year work). Credit control though, is something that might not wait. Clients want to know to chase. I actually said last month to an associate that I could see HMRC forcing sole traders into a paye situation - I kind of wish I was right now!

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Replying to insolventnl:
By petersaxton
19th Mar 2015 19:16

No assumption that purchases non-cash

EB wrote:

While I applause the idea behind no tax returns for the self employed, it cannot possibly work, as there appears to be an assumption that all purchases will be 'business' and that none will be paid for by CASH! Also who will decide which of those purchases are for business and which are private? (for example fuel, property overhead costs?). Who is going to apportion percentages against private use of telephones, farm properties, electricity use etc. etc.) 

Who manages the Capital Allowances etc. etc. etc.! This is not a well thought out plan, but there's a surprise!

Farmers are now being given 5 years to average, how is HMRC going to deal with that one!

Most accountants have a difficult enough time getting clients to bring their paperwork once a year, I dread to think how they are going to get clients to bring it once a month!

How are things like Capital Gains (Losses) going to be added to this Tax Return, when are the clients going to be billed for their tax liability - monthly? What about those that work in a seasonal business.

I could go on, but I am sure you get the gist.

There's no such assumption. Your other points are valid.

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By youngloch
19th Mar 2015 12:11

You're still all missing the point here

This is just a new service that will be rolled out - a new way of doing things. Much of the fear being raised on this thread is not based on what is being proposed.

Nowhere does it say anything about a once a month self assessment

Even Tax Calc emailed all customers yesterday stating that they do not expect much to change!

There are good things potentially here though:

P60's and P11D's linked to the taxpayers records automatically (sounds too good to be true at the moment)

Interest information being linked automatically (sounds too good to be true at the moment!)

Might CIS deductions be linked automatically to the tax payers record (sounds far too good to be true at the moment but I really hope that his will happen!)

A business tax dashboard for all - it's already part of the online record for some of our clients, strangely not all.

 

My top tip though: Pop down to Corals and put a bet on HMRC issuing a press release in 2019 which will have a headline "HMRC delay full roll out of digital tax accounts"

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By Ian McTernan CTA
19th Mar 2015 12:14

More work!

I see this as providing more work for me, and removing some of the most mundane stuff.

Clients who risk doing this themselves and letting HMRC calculate anything at all deserve all they get- judging on past experience: huge bills, sudden demands, wrong codes, debt collectors.  Perfect storm is linking client bank account to cloud accounting software then letting them submit the output from that that direct to HMRC without my input and error correcting.  I can see a lot of time spent correcting client errors (and having to get HMRC to change details after submission...)

All we need is for HMRC to suggest people all set up a direct debit for the taxes calculated by them and I'm looking forward to a bumper year.

Then of course this will have freed up more time for them to start enquiries, which is my specialism, along with people trying to not report income..again, something I deal with doing voluntary declarations.

 

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By Banzai
19th Mar 2015 12:24

The Elephant in the room

is surely that this whole enterprise is going to rely on a government implemented vast IT project and we all know how well those go.  The PAYE system and the self assessment system still cant talk to each other properly as it is today!  

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By johnjenkins
19th Mar 2015 12:26

What's more worrying

than the post is that there are people posting on this thread who actually believe that the self-employed, not only should, but could be paying tax in the same way as PAYE. They also purport themselves to be Accountants.

Once you understand what owning a business is all about then you can start to make changes. HMRC haven't a clue what they are doing. Proof - I am a volunteer for agent strategy and recently had a visit from the IT people that are looking after digital doodah. The questions I posed hadn't even been thought of and they went away very worried that what was being proposed wouldn't work. My views are just one of many.

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By North East Accountant
19th Mar 2015 12:50

Payback for no Business Records Checks1


I read that for Self Employed there will be a monthly online only system Voluntary at present but how long until it's compulsory?

We will probably all hasten our own demise.

Cloud will take off as we stampede to adopt the new methods. The Xero etc converts say it's a new collaborative way of working but the next step is simple Receipts less payments with the only analysis whether it went to the owner/shareholder. Easy peasy with direct feed.

Capital V Revenue - HMRC abolish CA's and all payments deductible except payments to shareholders. 

HMRC will launch their own free version of software linked to every bank and move to real time tax, with no need for an accountant along the way.

Of course, to get there is years of pain and hassle.

Did HMRC think I know, small business don't have enough to deal with what with RTI and AE so we something else.

And of course, lets get them back for the demise of Business Records Checks, which seem to have disappeared.

 

 

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By StephenGuy
19th Mar 2015 12:59

Replace 1 annual deadline with 12 monthly ones

- all with penalties attached.  Genius.  

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PJ
By paulgrca.net
19th Mar 2015 13:10

Cloud Cuckoo Land

The more I think about the proposal the more problems I can see.

Some are mentioned above but there are many others.

The whole things a shambles and ill thought out.

 

 

 

 

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By Sharland
19th Mar 2015 13:48

Abolishing Tax Returns

 

  I can understand why they want to do away with tax returns  -   They would rather make up their own figures !!!

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By Nebs
19th Mar 2015 14:20

40 minutes to 10 minutes

I am sure my clients will like the idea of only having to wait 10 minutes on the phone to HMRC, instead of the current 40 minutes.

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By johnjenkins
19th Mar 2015 14:31

As you make

a profit on one contract ad you want to invest a lot of that in a new contract I presume there would be some kind of roll over relief from one month to another rather like CIS is carried forward.

Come back Brian Rix (whitehall farces).

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Teignmouth
By Paul Scholes
19th Mar 2015 16:06

This was always an inevitable consequence of IT

The ability for HMRC to rely on employer and institution notifications about your tax affairs and for accounting software to talk directly to the government's software, has been talked about for years, did nobody notice that you can already submit stuff from your software to the government? VAT returns?  RTI?

The classic accounts prep job involves the client keeping and messing up their books for 12 months and for us to come along several months later, to discover the mess and spend days putting it right (and having insufficient time to show the client where they went wrong and to show them how not to repeat their mistakes) and also to put through the "accountant's mystery adjustments" like depreciation and accruals.

This work tends to be done in our own system or spreadsheets and we should (many don't) feed the adjustments and corrections back to the client's books.  Those workings are then input into our supa-dupa accounting software to produce a set of accounts and tax return and, if we are not already 3 days from the filing deadline, we might have 20 minutes to explain them to our client (months after the numbers meant anything).  Once agreed the accounts and return, containing all the properly tagged data are submitted to the government.

OR

The accountant can monitor the client's books month by month correcting and explaining errors as they happen and put through other adjustments or even show the client how to do them.

Depending on how the new system will work, throughout the year the client and accountant can see and discuss the P&L and financial position and when happy, in exactly the same way as a VAT return, or payroll, they click a mouse to submit the figures to HMRC.  If necessary (and as will be possible over coming months) a few weeks after the year end, the bookkeeping system sends a set of accounts to companies house.

Then the client and accountant can get on with far more important stuff or even go home.

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Teignmouth
By Paul Scholes
19th Mar 2015 16:29

DIY businesses

There are already a huge number of DIY businesses, especially amongst startups, and I think we have to get our heads out the sand and realise that, no matter how many rattles we throw out the pram, their number will increase.  

Whether they get their numbers right or wrong is actually of no consequence to us unless we can encourage them to use us, perhaps to double check their numbers from time to time, and then maybe start to give them more valuable advise than "that number goes in that box".

SteveOH above describes a messed up set of books by one of these DIY businesses, whereas last year I was approached by an IT specialist who runs his Ltd Company accounts on FreeAgent and where I could not find one error, he'd even calculated and posted deferred tax!

Yesterday, I answered bookkeeping query from a Clear Books user, who wanted to check on the bookkeeping entries for a van he got for his company on finance lease.  When I answered I was shocked when he came back to double check that he couldn't claim capital allowances but the depreciation would be allowable.

Shame this landscape gardener hadn't bothered to sign up on here, some might have found his advise useful:

https://www.accountingweb.co.uk/anyanswers/question/uk-tax-treatment-fin...

 

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By Donald6000
19th Mar 2015 16:58

They got rid of the specialists years ago from HMRC

Even if we accountants and tax agents submit monthly or quarterly spreadsheets/accounts, there is hardly any danger that HMRC officials will be able to decipher them as they got rid of most Inspectors years ago. What are they going to do, ask a clerical assistant to query our extended trial balances and adjustments for tax purposes?

 

Don't somehow think so.

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By johnjenkins
19th Mar 2015 17:09

@Donald

Don't you know HMRC have one of those new fangled computer systems that can tell the difference between a renewal and capital allowance. They also know if you want to claim the full CA or just part of it on a monthly basis. Entertaining and subsistence should be a good one etc. etc. etc.

All this just to hopefully get more votes at the general election.

We should really ask the SNP what they think as they might have a big say in the next government eh Donald?

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By laronde123
20th Mar 2015 10:30

Dont call it TAX RETURN call it a DIGITAL RETURN

I do not see personal tax returns as a major part of my business it is a service we provide to our business clients to ensure accuracy of their tax payments. Our role is that of accounts preparation and tax advice.

It seems to me that this should just ease our workload and allow us to obtain more information for direct from HMRC.

How the information gets to HMRC is not so important as what gets to HMRC. Very few business owners are in a position to produce accurate figures each month that they could submit to HMRC. Not sure that they would want to do this more than once a year anyway. The whole point of an accountant is to deal with compliance and ensure that all expenses and reliefs are claimed.

 

CIS

Given that HMRC are reluctant to tell accountants what has been submitted by way of CIS returns from contractors for a subcontractor clients I can't see how this will work. As the old annual cry "where's my refund" will not materialise unless expenses are submitted.

 

So it not called a Tax Return anymore. Theres lots we still have to return even if its submitted in new ways.

 

 

 

 

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By johnjenkins
20th Mar 2015 11:05

When there is a difference

between a self-employed subbie cis tax return and contractors return we are given a printout from HMRC. Absolutely brilliant. 2 minutes and problem solved even if it means client has to pay some refund back.

Try getting a printout from Long Benton for Ltd co's. You got no chance. So weird!

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By Aitch
20th Mar 2015 13:45

SA

Do it yourself and get it wrong?

Let us do it for you and get it right?

SA clients have had this choice for years, so  what's changed?

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By sherodwilliams
20th Mar 2015 14:29

Entrepreneurial?

 The comments made above are all pretty much understandable from the point of view that as practitioners we somehow feel that in some old fashioned world, accountancy is a vocation rather than a business and that whenever something arises that we don't like, we are entitled to be hurt and say how everyone is trying to stop us from making a living. What a load of old tosh ! - The biggest criticism of accountants is that they only concern themselves with compliance when the client is actually looking for pro - active advice & help. This concept as proposed will mean potentially a large change for lots of people not least the software houses and the HMRC investigation fee protection underwriters etc but they will take this by the scruff of the neck and ultimately come out the other side.Forward thinking accountancy practices now have 5 years to shape their businesses in a way which will continue to best serve their clients which in my mind is a pretty long time to plan. So smaller practices who want to succeed will be entrepreneurial & make sure that their continuing offer meets clients needs. (after all , our clients engage with us because they hope that we are forward thinking) which will leave those behind still contemplating the good old days when we had tax offices in every town & city staffed by Inspectors who were decent sorts and VAT inspectors who spent 3 days looking at an Evrite book. Those days are gone, just like the 4.00pm factory hooter when men left the factory gates on push bikes wearing flat caps & bicycle clips. The world moves on & we are not going to change it - it is we who have to change and if practitioners fear that then maybe its time to retire !!

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By MC1
20th Mar 2015 14:53

HMRC to introduce filing fee?

Feels a bit like HMRC are in competition with accountants sometimes.

Perhaps HMRC could come up with the slogan: "Deal with us direct and save"

And then charge £100 pa filing fee and guarantee no late filing penalties (with the auto-provisional method) and no accountancy fees.  Add in lots more round sum expenses claims and even prior year basis to simplify matters and hey presto!

Clients don't get the tax savings they might from an accountant but then again no accountants fees and no meetings and no (parasitic in some clients' view) accountants pressing for information.

And HMRC can be trusted to get it right more than accountants of course can't they?

Think how much extra revenue that would raise in (a) extra overpaid taxes and (b) filing fees.

That's the deficit paid off...watch this space!

 

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By petersaxton
20th Mar 2015 15:37

Sherod

I think you misunderstand accountants concerns.

They don't think HMRC can come up with a sensible system or deal properly with the data they are supposed to use.

 

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By johnjenkins
20th Mar 2015 15:56

@sherod

The reason Accountants are so protective of their profession is experience tells us that HMRC only get it right once in a blue moon.

Have a look at any system that is currently in use by HMRC and ask yourself. Does it work?

They chase corporation tax when there is CIS owed. They chase companies for money when they have been defunct many years. They fine £1200 when a refund is due. etc. etc. and I could go on (please don't I hear you cry).

Agent strategy was a brilliant idea - where is it now? Should have been up and running years ago. That was forward thinking.

We don't fear forward thinking or techno advancements. What we know is that HMRC will get it wrong and cause us more work which the client will not be able to pay for. How long does a phone call take? Forward thinking - let's ban communication then there's no problems.

As for insurances, they are about as good as the paper they are written on.

We are not far off the government giving us all pocket money akin to the job we do. No HMRC, no problem. Now that is forward thinking.

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By petersaxton
20th Mar 2015 16:30

John you are so right

All the theory that HMRC comes out with is always so different to what accountants have to deal with when it is implemented.

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By petersaxton
20th Mar 2015 17:00

They are right

"Nowadays it is thought that anyone can do tax."

They are right. Anybody can do tax. It's just that it takes a bit more than the run of the mill moron to understand it and do it right.

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By Gimlet2008
21st Mar 2015 12:57

xero and kpmg and digital accounts
Now i know we get ticked off from time to time for introducing something not relevant to the topic but ill risk it as I think it's bang on. Do you remember an earlier thread about why on earth KPMG would buy into Xero. Well does it all make sense now ? Did they know this was coming. And if yes was it more about saving headcount for them than competing with us for the local spark and plumbers.

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By rezasamii
22nd Mar 2015 13:38

Death of Annual Self Assessment Tax Return

This is a dangerous move bearing in mind that there are different types of income that HMR&C is unable to collect information about apart from a tax return, e.g. Overseas Income, Rental Income and self employment. Unless I have completely misunderstood the concept, I find the whole idea absurd.

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By aayzed
23rd Mar 2015 15:01

Funny?

And I thought HMRC didn't have a sense of humour.

 

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By Donald6000
23rd Mar 2015 16:02

Incomplete accounts

I would like to see HMRC put together a set of incomplete records and produce a profit and loss account and balance sheet from it. I seriously cannot imagine their expertise on this, yet years ago, this is the training that an Inspector (FT) would have received.

 

Pre-populating an account is not going to give an extended trial balance or a whole series of accountancy adjustments which go to make up the final thing.

 

So unless HMRC are going to develop such a system, for which they have not the slightest expertise, why should accountants worry. I am going to laugh my head off when HMRC make complete fools of themselves over this matter.

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Replying to thump3s:
By petersaxton
23rd Mar 2015 18:19

They don't need to do it

Donald6000 wrote:

I would like to see HMRC put together a set of incomplete records and produce a profit and loss account and balance sheet from it. I seriously cannot imagine their expertise on this, yet years ago, this is the training that an Inspector (FT) would have received.

Pre-populating an account is not going to give an extended trial balance or a whole series of accountancy adjustments which go to make up the final thing.

So unless HMRC are going to develop such a system, for which they have not the slightest expertise, why should accountants worry. I am going to laugh my head off when HMRC make complete fools of themselves over this matter.

HMRC only need to ask for the information in a certain format and then the software companies will do it all for them. If they don't because taxpayers dont want to use online bookkeeping then they will ask their accountant. The ideas may change radically after consultation so I wouldn't get too worried just yet.

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By johnjenkins
23rd Mar 2015 16:53

Can't wait

for the consultative document.

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Teignmouth
By Paul Scholes
23rd Mar 2015 19:40

@Donald6000

Sending inaccurate or incomplete info for quarterly VAT returns has never been acceptable, so this is just one step on from that.  It means businesses will have to keep their books accurately & up to date, don't see anything wrong with that, and for any clients who aren't currently capable of doing that then there's more work for you.

Like it or not, admitting that clients keep "Incomplete Records" is not something to shout about.

 

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Jennifer Adams
By Jennifer Adams
25th Mar 2015 15:19

Younlock says...

The biggest fear I have (and this would worry me) is that the 31 January deadline would shift forwards at some point........ clearly HMRC want the money sooner!!!!

Lilac says 'presumably no deadlines' - looking at the recent consultation document on penalties there will be - penalty points as per driving penalties.

See article here...The Demise of the £100 penalty.

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

I went to a Working Together group meeting yesterday and what was worrying was that an HMRC lady gave us a presentation about how they currently work with their 'partners' (colleges etc). There on the screen was a copy of an expense receipt which she said are submitted by App direct to HMRC.

The HMRC people said that there will be a consultation but that cannot be until after the election.

 

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