The Chancellor of the Exchequer has announced that small businesses will be required to file quarterly tax returns from 2020, under HMRC’s new plans to digitise the tax system.
Small business owners and self-employed professionals will be expected to submit a tax return every three months, using the new online system, which will be accessible either on the HMRC website, or via a free mobile app. The government estimates that this will generate an additional £600m a year by the end of this Parliament, as the taxman will have a better understanding of people’s income, and be able to issue more accurate bills.
The new digital system will also allow HMRC to make efficiency savings of around 18%, as taxpayers won’t have to pay for paper processing, or the 170 tax offices across the country. The government will reinvest these savings, along with an extra £800m, in their fight against tax evasion.
Whilst, the Revenue insists that the new system will simplify the process, a petition to ‘scrap plans forcing self-employed and small businesses to do 4 tax returns yearly’ already has over 103,000 signatures. Petitions with over 10,000 signatures will receive an official response from the government, while those which garner over 100,000 responses will be considered for debate in Parliament.
Whilst, initially, taxpayers will only have to submit a return on a quarterly basis, some accountants suspect this may eventually lead to paying four times a year as well. According to Chas Roy-Chowdury from the Association of Chartered Certified Accountants (ACCA), “It is not just about filling in a form, it is going to be a real burden.”
What are your thoughts on the government’s switch to digital tax returns? Will the move online be a positive one for your business, or yet another challenge set by HMRC for small businesses to overcome?
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