UK tax authority HM Revenue and Customs (HMRC) has denied that its “Making Tax Digital” project will require businesses to provide the equivalent of four tax returns a year.
HMRC was responding to an online petition against the proposals. The petition has now gathered more than 100,000 signatures, meaning that a parliamentary debate must now be held on the topic.
In a recent HMRC brief, the Government explained that, by 2020, most businesses, self-employed people, and landlords will be required to “keep track of their tax affairs digitally and update HMRC at least quarterly via their digital tax account.” These changes will be introduced for some businesses from April 2018, and will be phased in by 2020.
Financial Secretary to the Treasury David Gauke has said that this marks “the end of the tax return,” but stressed that it will not “feel like doing four tax returns a year.” Instead, “updating HMRC directly in this way will be secure, light-touch, and far less burdensome than the tax returns of today.”
The petition was created by business owner Paul Johnson. He said that the proposals will mean that the self-employed and small businesses are required “to file four tax returns a year rather than one as currently is done.” According to his petition, “each self-employed individual and small business will have the added burden of additional red tape, accountancy fees, and potential for fines.”
In its response to the petition, HMRC said: “These reforms will not mean that businesses have to provide the equivalent of four tax returns every year. Updating HMRC through software or apps will deliver a light-touch process, much less burdensome and time-consuming than it is today.” It added that “quarterly updates will be fundamentally different from filling out an annual tax return.”
HMRC stressed that quarterly updates “will not involve all the complexity of a full tax return.” It explained that the updates will be generated from existing digital business records and that in most cases, little or no further entry will be needed. In addition, business owners and individuals “will receive a developing in-year picture of their tax position, helping people have greater certainty about what they owe, allowing them to plan their finances more effectively.”
HMRC also clarified that in-year updates “will not be subject to the same sanctions for lateness or inaccuracies as apply now to the year-end position.” It will consult on what sanctions “might be appropriate for a more digital tax administration.” The Government will ensure that free products are available to those affected by the new rules, and will provide support for those needing to get online.
Click here to read the original article “HMRC Defends Tax Filing Reforms”
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