Digital tax accounts fail to win approval

A plan to force all self-employed freelancers to file their tax data online “at least quarterly” has failed to receive the backing of an independent body that oversees HMRC.

The Administrative Burdens Advisory Board, comprised of bosses and their advisers, said compulsory e-record keeping and quarterly e-updates “is not an approach we can endorse.”

The verdict follows its alert in February that, despite taking on feedback better, HMRC’s plan to mandate quarterly online reporting for one-man bands raised “serious concerns.”

It could not be done at a lesser cost to business and was ‘difficult to see how more frequent reporting [of tax data] can reduce the burden,’ the ABAB said, seemingly rebutting the government.

Now its concerns about compulsion are “significant,” and its suspicion about the impact on costs and administration is firmer – the online “quarterly updates will be more burdensome”.

It also has “reservations around the current capability of softwarebeing able to deliver HMRC’s vision,” perhaps in light of “various problems” of late with HMRC’s online forms.

The appetite of small businesses to use the software is questioned by the ABAB too while others, such as the Federation of Small Businesses, are concerned about the software's likely cost.

And a more general criticism that the advisory board has about the digital accounts won’t make for its future meetings – or relations - with HMRC any smoother.

The ABAB report says: “We were surprised and disappointed when this was announced at Autumn Statement, particularly that given our close engagement and relationship with HMRC we were not informed of the intentions earlier.”



20th April 2016

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