Business must act fast to have their say on a government plan to introduce quarterly tax returns that could quadruple workloads and increase costs.
The laws must be passed by April next year and so businesses have until the end of July to stand a chance of watering down the new legislation. Experts are advising businesses to write to their MPs and HMRC with their views on the proposed change.
‘Making Tax Digital’ is the latest in a long line of initiatives to speed up the tax collection process and it’s going to radically alter the way businesses report to HMRC. It will force firms to keep digital records, so that reports can be submitted to HM Revenue & Customs four times a year.
The impacts are likely to include changes to daily/weekly record keeping and firms will be required to use HMRC-compatible software to submit the information.
It’s not yet clear what will happen to the annual self-assessment return. Somehow, firms and HMRC need to get to the exact same position as they would have been with the full annual return. In practical terms, the only way to check whatever comes out from the aggregation of the four quarterly reports will be to do a full self-assessment even though it won’t actually be submitted.
HMRC seems to be set on having the new system and isn’t interested in any real exemptions for those that are digitally excluded – they’ll be expected to pay someone else to do the reporting.
Jason Piper, senior manager for Tax and Business Law at the Association of Chartered Certified Accountants, said: “The laws behind the system have to be passed by April 2017, so draft clauses will be published by December 2016. This means they’ll be written this summer.”
He warned that if businesses want some chance of changing the regime, they need to speak to their MP and HMRC between now and the end of July.
To see HMRC’s plans, click here
• For full story on what this will mean and industry reaction, see April issue of ERT.