Expert Advice on Tax, Business Finance, New Start-Ups, Accountancy, Chartered Accountant, Essex
There is much speculation about new plans to create digital tax return accounts for the self employed which they must update quarterly. UK Treasury and HMRC assert that the proposals are not complex, and are simply a way to reduce the widely acknowledged ‘agony’ of the yearly tax return. Chancellor George Osborne envisions the UK as one of the “most digitally advanced tax administrations in the world.”
There are however concerns being voiced in parliament about a hidden agenda, as HRMC is required to cut human resources in order to save £717m by the year 2020. Some think this goes hand in hand with the new system, as it would result in a need for less staff. Cynicism about the plans has been expressed by many, who believe a major motivation is to recoup £6.5bn tax which remains unpaid annually due to mistakes on tax returns.
The Forum of Private Business predicts that the quarterly filing regime means extra accounting expense for small businesses possibly rising to 150%. There are also fears within the sector that the system when introduced will become a new VAT.
In addition, proposed online filing assumes that all self employed people are computer savvy and have internet access, which is a gross miscalculation. Figures show that 20% of business owners are not online, and around 40% are not computer literate. There could also be problems for owners of seasonal businesses, who worry that quarterly statements would be taken as turnover predictors, leading to over payments.
A voluntary pilot scheme is set to begin in 2018, with the new system properly rolled out by 2020. For advice or assistance regarding any aspect of your business finances such as tax, accounting and starting up, call John S Culwick on 01268 680702