Share this content

Digital tax plan goes quarterly

25th Nov 2015
Share this content
istock_MF3d

Morsels of information in the Autumn Statement report indicate that by 2020 individual taxpayers will be expected to report and pay their liabilities every quarter via their new digital tax accounts.

During his Autumn Statement speech the Chancellor promised an injection of £1.3bn to deliver “the most digitally advanced tax administration in the world” by 2020.

The new digital tax accounts (DTAs) will require most businesses, self-employed people and landlords to keep track of their tax affairs digitally and update HMRC "at least" quarterly. “This will give individuals and businesses a more convenient real-time view of their tax affairs, providing them with greater certainty about the tax they owe,” said Osborne in his speech.

But there was also a sting in the paperwork tail. The government stated it will consult on "whether to align payment dates and bring them closer to the point when profits arise, so that taxpayers make a single regular payment that covers all their tax affairs”.

The Chancellor did not offer much tangible detail on the digital tax account, but Xero UK managing director Gary Turner anticipated that a full plan would be announced early in the New Year. “The ambition is to have 10m DTAs live by next year. Which is pretty ambitious given that UK’s working population is just over 30m.”

The investment in HMRC’s digital strategy runs somewhat counter to an 18% cutback in departmental spending and other economies. But the two processes are interlinked, according to Steve Cox, IRIS’s director of product management. “The HMRC closures last week wouldn’t have come as a surprise to those who have been keeping an eye on what’s happening,” he said. 

“The digital tax strategy is expensive. It’s a large part of why they’re doing the closures. They need cost savings. They’re looking to save £100m by 2025 with these office closures. It just shows how cost inefficient HMRC been. They’re playing catch up in many respects.”

According to Cox, software companies’ own customer support will increase in importance. While it won’t completely fill the gap left by a HMRC staff cuts, it will alleviate some of the hardship, said Cox. “We won’t give tax advice, of course, but we will be able to help you understand what you need to do to get it into the software when DTA eventually takes effect.”

Ed Molyneux, CEO of FreeAgent, took an optimistic view of the DTA initiative: “An enormous amount of friction can be removed from that process. We’ve been removing it on client side and now there's a mandate to do that on the HMRC side.

“It will take a lot of cost of compliance out of the economy. Very small businesses shoulder the burden of compliance - per employee it’s much more expensive than for large businesses.”

Osborne also said during his speech that capital gains tax on property will have to be paid within 30 days of disposal by 2019 via the online account. Quarterly reporting and accelerated CGT payments mean “the Chancellor wants us all to pay and to pay up faster", according to Chris Sanger, head of tax policy at EY.

“First we have capital gains tax for residential property (effectively buy-to-lets and second homes), who now have to pay almost 21 months earlier and now the government is looking at shortening the window for paying stamp duty from 30 days to 14. Following on from the Summer Budget’s advance of corporation tax, the Chancellor seems to have found a seam of gold that he wants to continue to develop.”

Replies (68)

Please login or register to join the discussion.

avatar
By Laurence52
30th Nov 2015 16:39

Transformational

The term transformation theory refers to a procedure and a "picture" used by P. A. M. Dirac in his early formulation of quantum theory, from around 1927.

This "transformation" idea refers to the changes a quantum state undergoes in the course of time, whereby its vector "moves" between "positions" or "orientations" in its Hilbert space.Time evolution, quantum transitions, and symmetry transformations in Quantum mechanics may thus be viewed as the systematic theory of abstract, generalized rotations in this space of quantum state vectors.

Remaining in full use today, it would be regarded as a topic in the mathematics of Hilbert space, although, technically speaking, it is somewhat more general in scope. While the terminology is reminiscent of rotations of vectors in ordinary space, the Hilbert space of a quantum object is more general, and holds its entire quantum state.

(The term further sometimes evokes the wave-particle duality, according to which a particle (a "small" physical object) may display either particle or wave aspects, depending on the observational situation. Or, indeed, a variety of intermediate aspects, as the situation demands.)

 

Quantum theory could be very helpful as it's possible to have something in two places at the same time so people will be able to use this to reduce the amount of time taken in inputting data and accountants can check two sets of data at the same time.

 

It makes as much sense.

 

Thanks (0)
avatar
By Vaughan Blake1
30th Nov 2015 17:01

If this is a cashflow thing..

could we not simply change the pattern of POAs?

I actually think that this is driven by Universal Credit more than anything else!

Thanks (0)
avatar
By Nemesis
30th Nov 2015 17:22
Thanks (0)
avatar
By AndrewV12
08th Dec 2015 13:19

Just been thinking

Could G.O. use this as a smoke screen, and abandon 4 Quarterly accounting submissions and demand say 2 or 3 Accounting returns have to be delivered every 12 months. As accountants we may feel we got away with 4 rather than thinking G.O. should be living in a padded bedroom.    

Thanks (0)
avatar
By Pavilionaire
09th Dec 2015 10:37

Impact on work flow

I can see many taxpayers who do their own VAT Returns but get an accountant to do their annual Self-Assessment Tax Return deciding to try and save some money by doing their quarterly personal digital tax account submission themselves.

We know the government will simplify the process - they're already receiving information about taxed income and pension contributions direct so the taxpayer will soon be confined largely to declaring only gross income and expenses.

Therefore, I expect accountants across the board to lose a large chunk of clients who do their own VAT, once the changes come in.

And once sole traders are making quarterly submissions how much easier will it be for the government to freeze the VAT threshold and therefore increase the tax take through VAT?

 

Thanks (0)
avatar
By Nemesis
10th Dec 2015 22:10

Making it up as you go along

Funny how often a profession that ought to insist on evidence based conclusions defaults instead to just making things up rather than waiting for the facts. Engage with the reality not the fantasy.

Thanks (1)
avatar
By Pavilionaire
11th Dec 2015 15:09

Fantasy?

Nemesis wrote:

Funny how often a profession that ought to insist on evidence based conclusions defaults instead to just making things up rather than waiting for the facts. Engage with the reality not the fantasy.

What do you mean?

The profession is facing a crossroads, far bigger than the introduction of Self-Assessment because back then there wasn't the technology or a fundamental change to the tax rules.

There will be no facts, only a timetable and a collective crossing of the fingers that Digital Tax Accounts will not crash the system.

 

 

 

Thanks (0)
avatar
By cstwragby
14th Dec 2015 12:10

Some more information released by HMRC today

https://www.gov.uk/government/publications/making-tax-digital

Thanks (0)
avatar
By North East Accountant
14th Dec 2015 13:50

Starts soon

cstwragby wrote:

https://www.gov.uk/government/publications/making-tax-digital

Thanks for heads up cstwragby.

All kicks off in April 2018.

Just when we get AE out of the way Quarterly (Real Time) reporting starts.

What joy!

Thanks (0)
avatar
By NH
14th Dec 2015 13:59

how?

this very much feels like "this is what we are going to do but we are not sure how"

Thanks (0)
avatar
By Laurence52
15th Dec 2015 08:17

ICAEW Tax Faculty requesting your views

Rebecca Benneyworth has an article on the ICAEW Tax Faculty on the proposed implementation and is asking for your views,

http://www.ion.icaew.com/Taxforum/post/Making-tax-digital---quarterly-re...

Thanks (0)
avatar
By NH
15th Dec 2015 08:55

really?

Laurence52 wrote:

Rebecca Benneyworth has an article on the ICAEW Tax Faculty on the proposed implementation and is asking for your views,

http://www.ion.icaew.com/Taxforum/post/Making-tax-digital---quarterly-re...

Rebecca's first question 1.  Do you think your clients want to report quarterly to HMRC - it will after all give them much more control over their tax liabilities which will be calculated quarterly?

You cannot be serious, "oh yeah great, I'd love to do that"

Thanks (0)
avatar
By Sheepy306
15th Dec 2015 09:19

@ NH
I assume that the tongue in cheek question is lost on you? Have you read the context?

Thanks (0)
avatar
By NH
15th Dec 2015 09:29

context?

Sheepy306 wrote:
I assume that the tongue in cheek question is lost on you? Have you read the context?

Yes I have read the whole thing, the answers to the questions are self evident.  My sarcasm was levelled more at GO/HMRC, (although in stating her desire to understand members views, Rebecca suggests she would actually like those questions answered as I presume she will report back to someone somewhere who wont care two hoots).

Thanks (0)
avatar
By anony scot
17th Dec 2015 20:59

Does any other country operate a system like this? If so, how does it work and is it a success?

Thanks (0)
avatar
By NH
18th Dec 2015 08:02

yes

anony scot wrote:

Does any other country operate a system like this? If so, how does it work and is it a success?

In France deadlines are much shorter anyway (May deadline for Dec year end), but a small business can setup as an "Auto Entrepreneur" and they pay a flat rate tax/ni on turnover at the end of each quarter

Thanks (0)
avatar
By steve 12321
18th Dec 2015 22:46

Interesting watching the government petition on this rapidly climbing

Next to abolish stupid auto enrolment for say small employers. 25 or less full time staff perhaps?

Thanks (0)
avatar
By steve 12321
18th Dec 2015 23:03

We finalised what I think we some complicated returns today and consequently charged quite high fees but only as they took a long time to do and to confirm info, ask questions to get comfortable they were correct. The garbage about being and to submit this info to enable quarterly accounting is baffling.

Thanks (0)

Pages