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The problem with 'Making tax digital'

15th Dec 2015
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The government has launched ‘Making tax digital, outlining its long-term play to digitise the UK tax system. But its ambitions could be too much for small businesses to cope with.

Since the Chancellor’s announcement in March heralding the death of the tax return, HMRC has received a £1.3bn boost to make his digital dream a reality. “This government is bringing the digital revolution to Whitehall – ensuring that the services it provides are similarly transformed. The tax system is no exception,” wrote Treasury secretary David Gauke in the introduction to the latest policy paper.

AccountingWEB member Steve12321 responded in terms that will be very familiar to small business owners and their accountants: “How is it better to have to produce accounts and calculate tax four times a year instead of once?”

He’s not the only person asking the same question. “If you have to update quarterly what will the deadline be? We’re almost going to give the information in real time. It will be impossible to run business because you will always be reporting to HMRC,” said Rebecca Benneyworth.

“Businesses won’t be able to cope. There’s essentially going to be four self assessment deadlines”, continued Benneyworth. “That’s going to be horrific, especially if we lay the existing penalty regime on top of it.” [NB: Since making these comments Benneyworth has been named as HMRC’s lead consultant on digital for small businesses - see belowEd]

Accountant and tax campaigner Richard Murphy also bristled at HMRC’s perceived misunderstanding of accounting. “What HMRC seems to think is that accounting is just an exercise in totting up the books,” Murphy wrote.

“It’s assembling the data to populate the return that takes all the time. HMRC’s claims utterly ignore that fact and want to increase the time-consuming part of the job fourfold. That they do not seemingly understand this is deeply troubling.”

Not all of AccountingWEB’s members were negative, though. “Once it comes in and becomes second nature, I think it might be a positive,” wrote Cstwragby. “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.”

“It’s still self assessment,” said SteLacca, referring to page 10 of the ‘Making tax digital’ document, which reads: “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.”

On behalf of the software trade body BASDA, chairman Kevin Hart responded: “Yesterday’s document both consolidates numerous separate pieces of information that have entered the public domain and confirmed speculation in the industry with regard to timeframe. It is, however, rather light on detail, such as how the many complexities of tax are to be addressed.”

Hart added that one of BASDA’s primary aims will be to balance the department’s aspirations with the regulatory burden it imposes on the tax/accounting software industry and its customers.

Personal tax accounts

Ahead of the digital strategy paper, HMRC launched the trial version of its newly renamed personal tax account (PTA) on 1 December. The system relies on the GOV.UK Verify identity management system to control access to the system. Verify uses third party companies like Verizon, Experian, the Post Office and a Dutch company called Digidentity to verify the identity of the user.

Set-up is supposed to take 10 minutes, but that flies out of the window as the user faces a series of tricky questions, some not answerable off-hand. In the case of Digidentity, the user needs to download an app to their smartphone.

The service is certainly secure. Steve Checkley, director at TaxCalc, observed on TaxCalc's blog: “The nature of the hoops that I had to jump through would suggest that it could only have been me that was trying to gain access to the account.”

But the worry is that many accountants’ clients could find Verify too difficult to navigate. “Despite providing my passport details, address details, bank account and credit card details, the Experian software also wanted answers to ‘lifestyle’ queries such as my mobile phone supplier/contract,” wrote Hugo Fair on Any Answers. “Not only does this feel invidious… but it brought my attempt to register to a dead end as I’ve never possessed a mobile phone.”

Gauke told delegates at the HMRC stakeholder conference on Monday: “By 2020 HMRC will be a world-leading tax administration that is efficient, effective and easier for customers to use, enabled by £1.3bn of extra investment announced in November’s Autumn Statement.”

HMRC may be ready for its digital revolution, but many normal Britons might not be.

Replies (160)

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By hannahaston
15th Dec 2015 15:15

Death Knell

I am really concerned about this, I took over my Father's accountancy business over 5 years ago and have gradually built this up to around 100 clients. It's just me working part-time as I have 2 young children and my Father works for me part-time. 

It is hard enough getting my non vat registered clients info from them just once a year let alone several times a year..............despite me sending emails and prompts throughout the year. I don't see how I will manage this on  my own especially as my dear pops want to retire next year!

Have HMRC considered the effects on small accountancy firms like myself?? I can see this putting me out of business.

Perhaps I should just sell up now! 

 

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By Arm266
15th Dec 2015 15:15

Quarterly Tax Returns

The majority of my clients are small businesses/private individuals who are not IT literate, some having to send their documentation to me by post - they cannot even scan a document into an email.  Most of them don't have both passports and photo-card driving licences.

They also could not afford my fees to do their returns 4 times a year.  They will go out of business or disappear into the ether, hoping that HMRC cannot find them.  As previous comments have said, HMRC will not have the resources to locate them;  current press comments have referred to HMRC's inability to even handle their current workload, especially answering telephones.

I believe that there should be a minimum threshold, so that businesses can afford the outlay of doing these returns, similar [if not the same as] for VAT.

Perhaps Rebecca Bennyworth can propose this.

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By leon0001
15th Dec 2015 15:23

Stagger groups?

Will income tax quarter dates match VAT quarters or will we end up with a total of 8 deadlines a year for many clients.

If they are matched, does that mean tax return dates will no longer be for years ended 5 April?

What about trust and estate returns, 4 R185's a year as well?

Will companies have to provide 4 P11d's?

Will trustees of finaly salary pension plans have to provide 4 valuations a year or will some things only be taxable once?

And what will the deadlines for returns and payments be?

How will loss relief work?

Will AiA's crystallise every quarter?

How quickly will refunds be paid for "negative tax" quarters?

I have an awful feeling that we are in for a very bumpy ride.

That's all I have time for until February 2016 folks.

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By tax91
15th Dec 2015 15:32

Digital reporting

Yet another ill thought out system - I agree with Helen, and wish Rebecca best of luck as she will need it.

I can just picture a few desk bound employed 9-5ers sat around at the Treasury thinking this is a bonza idea for reducing good old George's deficit in time for 2020's election. He, of course, took it on as his opinion of HMRC  is so high it  knows no bounds.

tax91

 

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Chris M
By mr. mischief
15th Dec 2015 18:09

No worries

See other posts of mine on this sort of thing.  Nothing to worry about, I have a simple and effective methodology which will enable every client of mine to comply in full and me to spend minimal time on this load of tosh.

I call it the "making it up methodology".

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By richards1
15th Dec 2015 20:48

Customer

Gauke told delegates at the HMRC stakeholder conference on Monday: “By 2020 HMRC will be a world-leading tax administration that is efficient, effective and easier for customers to use, enabled by £1.3bn of extra investment announced in November’s Autumn Statement.”

 

As a customer I think I will take my custom elsewhere!!!

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By Nemesis
15th Dec 2015 21:28

Tax Professionals

Tax professionals should derive conclusions from facts. Not make it up as they go along, like the authors of a book of west country folk tales. Rebecca will make sure that common sense prevails.

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By Rubicon
15th Dec 2015 23:09

The Irish Revenue ROS system already has pre-populated returns and allows you to see all payments made for all tax heads they seem to have it sorted ? Maybe the HMRC could learn a thing or two this tried and tested system. It is also easily accessed. Digital is here to stay and more penalties.

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By andy moore
16th Dec 2015 00:21

Concentrix

I was told, on the phone, a couple of weeks ago by Concentrix that my clients 64/8 was not valid as it was over 12 months old....

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By Nemesis
16th Dec 2015 09:39

Not 4 returns, not 4 sets of accounts

Just an information flow from the digital record keeping app or software. And 'at least' merely reflects that there are some existing obligations that require monthly reporting and that will not change. 

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By Nemesis
16th Dec 2015 09:47

A Different Perspective II

From the summary to the ICAEW's 'Providing leadership in a digital world' (published October 2015)

Digital technology is transforming businesses, economies and societies, and increasingly affecting the accountancy profession. This presents many opportunities to serve businesses and the wider public interest better by improving the way accountants work, enabling valuable new services and providing access to fresh markets and networks.

But the digitisation of the economy also raises risks of marginalisation and irrelevance if the profession fails to adapt. To maximise the opportunities and manage the risks of a fast-changing business environment, it must evolve to deliver valuable and relevant tasks, build differentiated skills and encourage responsive organisations.

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By ireallyshouldknowthisbut
16th Dec 2015 11:08

.

The "powers that be" will utterly fail - as they always do - to differentiate between a 5 person business with a bookkeeper popping in a few days a week and an accountant, who quite frankly CAN report quarterly, or even monthly if they really have to, and will adjust.

To a self employed taxi driver. 

Its the same blindness they have on pensions. All these things are "micro businesses" but vastly different in their ability and willingness to push data volume at government. 

Quite what HMRC even want to do with all this crappy data is another story. 

 

 

 

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By North East Accountant
16th Dec 2015 17:32

Ivory Towers

As HMRC retreat from their 130 odd local office's to 13 Regional Ivory Towers they will be even further away from the front line of the high street, industrial estates and back streets where real life businesses try and earn a living.  

Like it's been said by other posters more and more businesses will duck out of the system and get on and earn a nice living without all the VAT, Income Tax, AE etc quarterly hassle or just make up the figures.

HMRC in their Ivory Towers will be having meetings, changing the names of things for the sack of it and picking on the easy targets who are trying to do it right all the while leaving the office at 2.30 on flexitime after a day spent at the computer.

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By Tim Vane
16th Dec 2015 18:00

Some people have obviously never heard of chi-squared or connect, or they just don't get the power behind them. By 2020 it will be pretty much impossible to hide a business. It'll be the only dark house in a party town.

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By danielgricks
16th Dec 2015 18:23

Simple Solution

As what is being proposed is completely unworkable and will place a huge administrative burden on the self-employed (Cameron's contrary words disappear with the tumble weed) can Rebecca consider this simple solution:

Like Payments on Account, HMRC could calculate 3 quarters' returns based on the previous years' Self Assessment. When we file the year's Self Assessment this will be reconciled.

If clients' estimated returns are wildly out then, like Payments on Account, these can be adjusted.

The Treasury will get their tax earlier (which is what this is really about) and everyone will be happy.

 

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By richards1
16th Dec 2015 21:45

Simple Solution

If clients' estimated returns are wildly out then, like Payments on Account, these can be adjusted.

The Treasury will get their tax earlier (which is what this is really about) and everyone will be happy.  SIMPLS Solutions says.

 

As long as the penalty on HMRC for over taxing is significant ie they pay me 100% interest on any overpayment.

EG if I decide during the year to invest in an EIS or an SEIS.

But like everything with HMRC its one way

SO it isnt SIMPLE is it??

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By AndrewV12
17th Dec 2015 10:33

Conservative party, the Party of small businesess, dont laugh

Believe it or some some people on this web site think quarterly filing is a good idea, I thought UKIP was full of nutters until I found this website.

Oh yes lets apply filing 4 tax returns to other parts of my life, Oh dear i will have to do 4 oil changes a year to my car, clean the house 4 times a week, go shopping 8 times a week, ooohh just to get into the swing of things, i think I will prepare all of my clients Accounts 4 times this year, just incase. 

I did not vote in the last general election but if was a small business owner and I voted Tory I would visit my local MP (if Tory) and put a flea in his ear, the biggest betrayal since Judas had a plan to get rid of the Romans.

 

http://www.touchfinancial.co.uk/knowledge-centre/featured-articles/artic...

 

A way around the madness could simply be for the first 3 quarters file the quarterly Vat returns, prepare the Year end Accounts and file as the forth quarter.  

As I previously advised the final quarters figures will be totally out of sync with the first 3, therefore the last quarters filing may generate a tax refund.   

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By carnmores
17th Dec 2015 12:36

after all the hubris on here its great to hear from

Nemesis!

why should high earning selfemployed and high net worth individuals have so much more time to pay their taxes than those on PAYE

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By Pavilionaire
17th Dec 2015 17:54

Value of a practice in a DTA world

I know of a local accountant who is about to retire.  A year ago - before the Chancellor's "abolish the Tax Return" announcement we had a chat and he said he wanted 1 x Gross Recurring Fees for his business, which is largely compliance-based and Tax Return-heavy.  I'm mindful 1 x GRF has been the norm for many, many years.

On the face of it now that figure looks excessive.  That workload could be halved with DTA, or it could double.  Who the hell knows??  I'd be very interested to hear of any other views on this aspect.

 

 

 

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By Vaughan Blake1
18th Dec 2015 14:47

Interesting Question

Pavilionaire wrote:

I know of a local accountant who is about to retire.  A year ago - before the Chancellor's "abolish the Tax Return" announcement we had a chat and he said he wanted 1 x Gross Recurring Fees for his business, which is largely compliance-based and Tax Return-heavy.  I'm mindful 1 x GRF has been the norm for many, many years.

On the face of it now that figure looks excessive.  That workload could be halved with DTA, or it could double.  Who the hell knows??  I'd be very interested to hear of any other views on this aspect

In just about any other business the prospect of quadrupling the available work, the value would shoot up.  Imagine the impact on the value of garages if servicing suddenly had to be done quarterly!  Garage proprietors would be rubbing their hands together with glee rather than wringing them in misery.

I frequently draw parallels between accountancy firms and garages.  In many ways we have similar business models when you think about it, and we can learn a trick or two from them.

Ever try leaving the garage with the car without paying the bill in full?  Not in my part of the woods.

Fixed price servicing and checking with the customer before doing extra work like changing the brake pads.

Being clear about the pricing structure & time frame when a customer brings in a broken car with an unidentified problem. 

And of course the customer can always do their own servicing/repairs.

My point is that an accountancy firm is a business like any other, so the normal rules apply. Supply and demand drives any market.

What I can see happening is that valuations will be done on a different basis.  This will create a price differential so that firms with different client bases will have varying values. If your client base is 100 Ltd companies with directors, DTA will probably have a positive impact, a firm with 500 subbies with the same turnover will see things rather differently.

I have always thought that automatically valuing businesses solely by reference to turnover is seriously flawed. Would you use this basis for valuing a garage business?

 

 

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By Pavilionaire
18th Dec 2015 15:14

Workload

Vaughan Blake1 wrote:

Pavilionaire wrote:

I know of a local accountant who is about to retire.  A year ago - before the Chancellor's "abolish the Tax Return" announcement we had a chat and he said he wanted 1 x Gross Recurring Fees for his business, which is largely compliance-based and Tax Return-heavy.  I'm mindful 1 x GRF has been the norm for many, many years.

On the face of it now that figure looks excessive.  That workload could be halved with DTA, or it could double.  Who the hell knows??  I'd be very interested to hear of any other views on this aspect

In just about any other business the prospect of quadrupling the available work, the value would shoot up.  Imagine the impact on the value of garages if servicing suddenly had to be done quarterly!  Garage proprietors would be rubbing their hands together with glee rather than wringing them in misery.

I frequently draw parallels between accountancy firms and garages.  In many ways we have similar business models when you think about it, and we can learn a trick or two from them.

Ever try leaving the garage with the car without paying the bill in full?  Not in my part of the woods.

Fixed price servicing and checking with the customer before doing extra work like changing the brake pads.

Being clear about the pricing structure & time frame when a customer brings in a broken car with an unidentified problem. 

And of course the customer can always do their own servicing/repairs.

My point is that an accountancy firm is a business like any other, so the normal rules apply. Supply and demand drives any market.

What I can see happening is that valuations will be done on a different basis.  This will create a price differential so that firms with different client bases will have varying values. If your client base is 100 Ltd companies with directors, DTA will probably have a positive impact, a firm with 500 subbies with the same turnover will see things rather differently.

I have always thought that automatically valuing businesses solely by reference to turnover is seriously flawed. Would you use this basis for valuing a garage business?

 

 

There is no way the workload will be four times.  At worst the quarterly filing will be something akin to filing a Flat Rate VAT Return, but even that would represent a huge operational headache for the majority of small practices.  Month-end is already loaded with payroll, VAT Returns and filing company accounts.  We now have auto-enrolment to add to the mix and to throw in all your sole traders, partnerships and landlords too is mind-boggling.

 

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By leon0001
18th Dec 2015 16:01

Optimistic - naive, perhaps?

 

[/quote]

There is no way the workload will be four times...

 

[/quote]

That's a sweeping assumption which is not in accordance with my experience of dealing with HMRC "improvements" over the last 15 years or so. 

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By Nemesis
17th Dec 2015 21:27

Embrace the future

You have nothing to fear - providing you embrace the future

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By pauljohnston
18th Dec 2015 14:08

Its not embracing the

future that scares me - its the fact that HMRC are driving it that does.  HMRC's previous record of implementaion means it will be down to Accountants to sort out the mess and receive many false messages, penalties etc

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By steve 12321
19th Dec 2015 16:08

It's good that someone like Rebecca can provide an input. I hope it's that this-
1- don't change it. It works
2- increase / accelerate payments on account of you need to. If you can't control what you do with our money better
3- leave the self employed to make money and keep costs down. Greater profits will lead to more tax to HMRC.
4- get rid of think tanks and the like. Ideas for ideas sake are not good
5- consult with the profession and take our advice. We understand it. We will freely give you the advice to stop you making massive expensive mistakes.
6- you are the cause of problems. Auto enrolment is a burden small business do not need. It discourages employment. That is a fact. I know.
7- landlords are not a problem and a risk.
Your decisions and lack of understanding are the risk.
I seriously think the government and HMRC are having a serious detrimental effect to the small businesses, those in the tax system other than those on paye and need to be removed pronto.
I encourage all to fight this move in the strongest way possible.
We need to support the petition to the government . Ask our clients to do the same and then take action on the streets.
This bunch are bad for the country. They have no experience of running a business. Well maybe some non-exec positions for their status.
Where is this simplification. Ask us. We will tell you the truth. Beware the self interested who want to sell software, want more work to earn more fees. I put clients' first. This is bad for them.

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By Jamesm2705
19th Dec 2015 19:00

Petition

I have just signed the petition titled "Scrap plans forcing Self Employed and Small Business to do 4 Tax Returns Yearly" at https://petition.parliament.uk/petitions/115895

I urge everyone who hasn't already signed to do so and to tell all clients to do the same. There are only around 71,000.00 signatures so far, suggesting that not many Accountants are aware of it as yet (I wasn't until I read the above post).

As far as I am aware, it is the only petition open on the subject at the moment but I do wonder if the wording of the petition could be better as we don't exactly know exactly what sort of quarterly compliance we will have to adhere to as yet. 

 

 

 

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By AndrewV12
20th Dec 2015 12:21

Petition

Doen it 76,754 so far 100,000 needed

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By steve 12321
20th Dec 2015 09:15

Act or be sorry
Can as many as possible send the petition details out on Facebook, Twitter and to their clients
This really is a compliance burden that will break the camels back.
This is not a case of a hysterical reaction.
It cannot work. Tax and accounting is too complex. All we need is a simple solution. they want more money earlier and they have no thought for the impact on business. This is the worst red tape ever being proposed. It has to be stopped

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By carnmores
20th Dec 2015 13:41

Petition - ridicullous

thats the trouble with these things they give people the opportunity to support worthless causes as if anyone in power really cares.  

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By 68fw
20th Dec 2015 14:14

organised civil disobedience

 

People said nothing and looked the other way when the State eviscerated the working class and emasculated its unions.

Right now it's the next phase, the assault on the self employed, blue collar and professions.

You all should know where it's headed... now is the time to say enough is enough, corporate capitalism is done.

 

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By steve 12321
20th Dec 2015 22:31

The petition is not the solution but it's one of many things that can be done to highlight the concerns people have. It is not strictly true as written as we don't know exactly what is proposed. But it will be onerous and costly. That is certain. People need sufficient info to prepare their tax return. It does not have to be real time bang up to date on accounts software coded and perfectly reconciled with all period end adjustments done to get accurate profit or losses, does it?

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By Nemesis
20th Dec 2015 14:10

Don't waste your time on petition

There are no plans to require 4 returns a year or 4 accounts a year. How could there be, for all the reason identified in these exchanges and elsewhere. Don't believe the unprofessional scaremongering. 

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By Nemesis
20th Dec 2015 16:02

No - great imagination, but no. Quite the opposite. Building capability that is necessary to maintain competitive edge.

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By 68fw
20th Dec 2015 18:00

Competitive edge?

Rather than amend and re-regulate banks and corporations, the State/corporatocracy seeks to increase onerous regulation on the self employed micro-business'.

The burden of bureaucracy and the planned efficient tax-take is channeled ever upwards from the general population to the top  .01%... the divide between the rich and poor continues to grow in this country as a result of the maintenance of your competitive edge - fact; not imagination my friend.

Wake-up and smell the coffee.

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Chris M
By mr. mischief
20th Dec 2015 22:56

Teachers

Anyone over 30 have the same level of respect for teachers as they did 10 or 15 years ago?  I don't even though my mother was a teacher and many friends and relatives are teachers too.

As a profession teachers in the UK have spent most of the last 40 years carping, moaning, bleating, whingeing and either striking or threatening strikes.  And fighting all Government-imposed changes tooth and nail regardless of who was in power.

Where has this got them?  Nowhere.  In my view it is borderline whether you can really define UK teaching as a profession any longer, they've not acted very professionally.

I'm going to deal with the latest drivel from the Government in the same way I've dealt with RTI, auto-enrolment, the dividend tax Bill, and Uncle Tom Cobbley.

I'm going to get on with my job.  No moaning or carping, no effing petitions.  Ideally whatever daft scheme is being proposed is something I can cover without a fee increase, like RTI was.  If necessary I will put fixed price contract variations in front of clients, as I have with AE, and let the clients choose whether they opt for my services on this front.

Hopefully some weak local competitors will fail to deal with this latest change well, great.  My accessible market will increase.  Hopefully some local weaklings will spend a lot of time moaning and whingeing and doing petitions instead of just coming up with a sensible low-cost plan and implementing it.

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Rebecca Benneyworth profile image
By Rebecca Benneyworth
21st Dec 2015 11:46

Observations on your debate
It is great that there has been a lively debate on here. I see myrole in advising HMRC on this as two fold - there are two aspects to this problem.

First, as this inevitably will lead to the requirement for more digital engagement by both agents and taxpayers, we need to explore those who prefer not to engage digitally and analyse the reasons. For agents who don't, to be frank I think the writing is on the wall. Those who complete clients' tax returns on paper and submit them early in the year so that "HMRC can calculate the tax" are of a dying era, and it is not a business model that will survive for long. For the rest - those who have adopted or even embraced digital tools, this development may eventually be seen as the turning point for our profession. I spoke this month to an agent who has those clients who are able to on direct bank feed software; they analyse their bank transactions (those that are not automated) within around 20 minutes per month, using their smart phones. I would be thrilled to see the end of rubbish record keeping but of course it is not something my clients are ready for. So for agents with the right client base, this could be a real boon. I was horrified by the project that AccountingWeb has been doing with one direct bank feed provider to hear how much time firms spend reworking poor manual records, time which is largely written off! But I don't have "the right sort of clients" and we must be able to continue to provide services to clients who are uncomfortable with technology - HMRC needs our added value in adding back disallowable expenditure, checking that all income is declared and so on. So for the agent community it is how we might continue to act for these clients without the changes imposing additional admin burdens. For taxpayers dealing with their own affairs, and for my "less digital" clients, we need a really good understanding of what the barriers are. Of course, for some, it is lack of decent connectivity. But although that is a significant barrier for those affected by it (and suggestions that you take your records to the Iibrary are just plain stupid) my guess is that there are far more small businesses with adequate Internet access but no inclination or ability to use digital technology. Is this just an "age" thing? I doubt that it is that simple but we'll need to look at all existing work in this sphere and if necessary commission some more.

Quite separately, there is the question of what data is uploaded quarterly. There is absolutely no suggestion of four tax returns a year or even four sets of accounts a year. But to bring "tax close to the point of transaction" - some sensible figures will be needed. The principle that tax is paid soon after the profits arise is, I believe, a sensible one. Yes, it looks a bit like PAYE for the self employed but can anyone tell me what is wrong with that as a matter of policy? Many of my smaller clients would be happier with paying as they go along and no nasty shocks in January. BUT that would rely on reasonably accurate measures of profit through the year, maybe with tax calculated on a "year to date" basis, just like PAYE. Otherwise you still get a nasty shock when the raw data becomes a set of accounts. And I don't think the ultimate answer is the cash basis. That's not profit. For me, the accounting issues are HUGE, which is why we, the accountancy profession, need to get past the initial shock and start thinking about what might work with the minimum of fuss. For example, I prepare monthly accounts for my local football club, using last year's bar gross profit and making an automatic stock adjustment monthly until we count at the year end. That *might* work for some retailers but not for others. Service business are *easy* I have been told, but not my agricultural fencer, who might buy stock three months in advance of a major fencing project because the price is right.

There is no substitute for hard slog on this project, assembling all of the evidence and data, then trying to design a workable solution. I have been inspired this weekend by old interviews with George Lucas - "Never accept that something can't be done. You need to think about it harder"

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By Old Greying Accountant
21st Dec 2015 13:24

Yes

RebeccaBenneyworth wrote:
Yes, it looks a bit like PAYE for the self employed but can anyone tell me what is wrong with that as a matter of policy?

 

Many business have widely fluctuating turnover, for example florists, gift card shops, holiday lettings etc, even the building trade.

Forcing them to pay tax monthly or quarterly takes away working capital which is required to cover the low months of income. Businesses work on annual cycles and with the banks being difficult on overdrafts and borrowings it could have a severe cash flow impact on many businesses, which has knock on effects down the line for the whole economy.

The changes and the pace of change being pushed by this government have in my opinion the high likelihood of damaging the fragile recovery we are undergoing and to plunge us in to an even worse recession, especially as they are brewing up a spectacular collapse of the housing sector which underpins much of the economy.

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Rebecca Benneyworth profile image
By Rebecca Benneyworth
21st Dec 2015 14:57

PAYE for the self employed

Hi OGA

I really did mean pay as (and on the amount) you earn, not some guesstimate based on last year. Surely if the profits are earned, the business should be able to pay the tax provided they have collected the funds? But this does mean that the quarterly data needs to be good quality. Everyone in business knows that the longer you leave before collecting a debt, the harder it is to collect and tax can't be any different. If a business does not have sufficient working capital to pay the tax on profits as they are earned, then isn't it technically insolvent anyway? How would they pay their final tax bill?

 

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By ronlfoot
21st Dec 2015 19:17

Give us a Break

Rebecca

I know you have a brain the size of a planet and are justifiably very highly regarded but the occasional paragraph break would make you more readable.

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Rebecca Benneyworth profile image
By Rebecca Benneyworth
22nd Dec 2015 12:26

sorry!

Our internet is so slow here that I struggle to post! I will remember the return key next time!

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By carnmores
21st Dec 2015 12:45

thanks Rebecca

on the money as usual , i seem to remember a couple of years ago we discussed   pre populating tax returns with PAYE info as they do with state pensions now , that is what this is, there is no room for hand written tax returns anymore; we have been submitting tax returns on the net for 10 years, time to get with it and move on or get out. 

merry christmas everybody

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By DMGbus
21st Dec 2015 15:15

Fluctuating income problem - AIAs

I have some clients who show profits at a tax liability level in some individual quarters but offset by other quarters where Annual Investment Allowance wipes out taxable profits.

I really do hope the point is got across to HMRC that for such clients they should NOT be paying POAs in quarter 1, then get a refund in Q2, then pay a POA in Q3 then finally get a refund in Q4.

 

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By DMGbus
21st Dec 2015 15:22

CIS in year over payments

Some limited company CIS traders build up significant overpayments over the tax year where CIS deductions from income then after the tax year end have a VERY long wait to get the tax back.

The point should be strongly made to HMRC that until HMRC gets its own house in order in this respect then HMRC should have no ambitions to put stricter (eg. quarterly) payment deadlines on taxpayers.   Tax obligations should be mirrored.

This CIS farce is a classic example in fact where HMRC have data and withold it from long suffering taxpayers.    I say let HMRC prove itself with CIS tax deductions first...HMRC should automatically credit a taxpayers online PAYE account for tax deductions per CIS300 returns made by contractors, with the subcontractor having an opportunity to correct any errors by EPS - then errors by contractors could be in-year identified.

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By taxbakbristol
01st Jan 2016 03:31

DIGITAL FARCE v CIS LTD COY overpayments

This is the first sensible comment on this matter!

Let HMRC prepopulate CIS/Child Benefit . Pensions , other taxable benefits FIRST!

Then learn how to answer a phone call and a letter .

WALK FIRST then TRY a GENTLE JOG!

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By Nemesis
21st Dec 2015 19:40

Fluctuating income? EoY adjustments? Claims and allowances?

Progress against annual forecast, including quarterly variation. Accountancy input forward looking instead of retrospective.

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By steve 12321
21st Dec 2015 23:11

HMRC info on going digital
I thought I ought to look at what they are saying. There is no consultation on whether this is happening. This is happening. They make it sound all straight forward. Think it will be easy for everyone.
Be interesting to see the details as they emerge and the platform and mechanics of it all. I don't think it will be an easy time over the next few year and Until the switch is complete. I will struggle with this. Assume HMRC will support everyone through this fully and ensure the explain how people can get their tax correct. There is of course the use of the penalty. The digitalisation can help reduce them. Wonderful stuff.
It's not going to be fun or easy to deal with - well that's how I feel, which is just my own view.. And it has got to lead to more costs surely?
Who can explain how the digital world of tax will work to help the less modern accountant? Me. I will try keep an open mind if someone can explain how easy this will be, how it can be done to the same budget cost and same time or less even, to reduce the burden. Looking forward to the answers and reassurance.

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By Vaughan Blake1
22nd Dec 2015 14:59

I'm confused Rebecca!

You say that four sets of accounts and four tax returns are not going to be required, but that the quarterly payments will be PAYE using quality data and not simply be payments on account.

To achieve this 'interim submissions' (but not accounts or tax returns), would need to be done cumulatively, and on the same basis as the year end ones, if a year end 'balancing adjustment' is not to be needed. 

I can't reconcile these two thought processes.

What of the large multi-office solicitors partnership?

When will the more frequent than quarterly filing requirement kick in?

Whilst I am totally on board with the digital concept, I am unclear as to what the quarterly deal is trying to 'fix'.

 

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By the_Poacher
29th Dec 2015 16:12

Verify - or not!


Enrolling, before Christmas, was slightly more invasive than a prostate exam by a fat fingered doctor.  There were almost no useful services behind it.

When I tried to access the service (via Experian) today it told me that some of the details successfully verified previously were incorrect! It then asked me supplementary
questions and none of the options offered to me were correct!  Sounds like Experian hold incorrect data so I'm off down the complaint route.  No doubt ending with a complaint to the ICO

This is not a beta service, surely it's a (poor) alpha at best?

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By 68fw
30th Dec 2015 19:00

bad moral attitudes ?

It is deeply cynical and disingenuous to conveniently decree that annual accounting/small business book-keeping are henceforth inadequate.

Of course it will be, if the state legislates to collect data quarterly and then it is only a matter of time until real time filing and payment demands are enforced.

It is time for tax resistance - small business' should withhold paying tax - if 250k small business' resist then I suggest the state will have to reconsider...

It's simple: "No representation, no tax"

 

 

 

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By carnmores
30th Dec 2015 19:57

all this negativity
Is pointless roll on the future

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