At the beginning of the year we reported that more than 100,000 small firms had signed a petition demanding HMRC to rethink their proposal for quarterly returns.
The Treasury Committee then wrote to David Gauke, Financial Secretary to voice these concerns. The letter raised that very little detail has been given about the proposal and asked that assurance be given that:
businesses will not be compelled to pay tax sooner than now businesses will not be required to provide quarterly updates requiring more burdensome record keeping than now adequate arrangements will be made for those businesses who do not use computers; and all the details including the associated penalty regime will be subject to full consultation prior to any decisions. HMRC has published a Myth Buster alongside their other Making Tax Digital publications which would appear to address some of the issues. However further information on the transformation plans of the tax system are to be published in 2016 with consultation on the full details.
David Gauke on Making Tax Digital 2 March 2016
At an Armstrong Watson event in Carlisle, the Financial Secretary to the Treasury reassured delegates that the Government’s Making Tax Digital reforms do not mean four full tax returns a year.
The Armstrong Watson event: 'Essentials of pensions, tax and payroll in 2016' received a speech by the Financial Secretary to the Treasury David Gauke on the Government’s Making Tax Digital plans.
Mr Gauke said:
“ These reforms will improve the quality of record keeping, reducing the likelihood of mistakes and contributing £920 million to the Exchequer in additional revenue by 2020, then £600 million a year thereafter. This is good news for businesses – and good news for the Exchequer too. But with big changes come challenges and concerns. So I would like to take this opportunity to address some of these concerns; because I do not underestimate the scale of these changes, and it is important that we get this change right.
First of all, this transformation does not – repeat, not – mean four tax returns a year.
What it means is that by 2020, most businesses will be keeping track of their tax affairs digitally, updating HMRC at least quarterly via their digital tax account.
Importantly, these quarterly updates will not involve the complexity of a full tax return, where the business, or their agent, has to gather together and manually input data onto an electronic or paper form, and then perform various calculations. Instead, updates will be generated from digital records and in most cases, little or no further entry of information will be needed. It will be much quicker, easier and far less burdensome than the current process. The agony of the annual tax return will be a thing of the past.” “This year saw a reduction of almost a quarter in the number of people submitting a paper tax return – that’s over 340,000 fewer people doing things the old way. Meanwhile, the percentage of people using online filing has increased once more – from 85% to 89%. More than 825,000 customers accessed their Personal Tax Account as they completed their tax returns. Over a quarter of a million customers used HMRC’s virtual assistant in the last 3 weeks of January. Over that period, HMRC staff assisted in more than 114,000 webchats. And because of these digital advances, the number of phone calls to HMRC in January from people seeking assistance to complete a Self-Assessment return has fallen by over 50% in the last two years.” The Financial Secretary went on to highlight some of HMRC’s performance figures for this year:
Mr Gauke rounded off his speech by saying that there will be a wide-ranging consultation exercise starting in the spring, which he urged all payroll professionals to get involved in.
“We are already talking to a wide range of business, agents, software developers and professional bodies. We are introducing these reforms gradually – not phasing them in fully until 2020, because we know how important it
CIPP Policy News Journal
25/04/2016, Page 227 of 453
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