Details within the document ‘Making Tax Digital’ reveal that millions of entrepreneurs and small business owners will be forced to file tax returns online four times a year by 2020. Currently they only need to do so once a year.
This change will affect around four million people, including all those who are self-employed, small business owners and landlords who make more than £10,000 a year profit.
The plan is that by mid-December more than a million people completing a self assessment will be directed to their online PTA which HMRC believes will:
- provide a clear and joined-up view of the tax they pay and benefits they are entitled to
- enable people to update their tax details as they occur in real time, removing the need to resubmit information
- make it easier and more efficient to contact HMRC officials through services like web chat and a virtual assistant.
However, a significant number of small businesses and their representative organisations have expressed concerns that the move will put more pressure on small business, particularly those run by sole traders, who often already struggle to complete a single annual return. Whilst it may suit some businesses to report quarterly rather than annually, in our view it should be a choice, not a legally-enforced obligation.
Other concerns are also being expressed about how effectively and securely the move to digital tax accounts will be delivered, too many Government IT initiatives have gone wrong in the past.
Between now and May 2016 HMRC will be adding new services to the PTA, including:
- Improvements to the ‘Check your tax estimate service’ so people can look a year ahead and back on their current, future and previous tax position
- A new online payment and repayment service
- Expanding the opportunity for non-Self Assessment customers to choose to stop receiving paper correspondence from HMRC
- Integrating the Tax Credits online service in time for the renewals of Tax Credits
- Introducing change of circumstances for the Marriage Allowance service
- Introducing the new National Insurance/State Pension service – a trial which started this month.
