The End of The Tax Return

In March 2015 George Osborne announced the end of the tax return by the year 2020. It ceated the desired impact at the time but seems to have been generally forgotten by most people since. Gradually more information has emerged and we are now coming towards the end of a consultation about some of the details. So what is actuallly proposed and does this really spell the end of the tax return?
Goodbye Tax Return – Welcome Digital Tax Accounts
Although there are details to be resolved (some of them important) and the precise timing may change, we are convinced that HMRC are going to go through with this proposal.  They were early adopters of computer technology and that means some of their systems are creaking in the 21st Century. They have decided to respond with the most advanced system in the world so you can’t accuse them of lacking ambition! Soon there will be 50 million taxpayers and businesses with Digital Tax Accounts and they will need to learn how to use them or be penalised for not doing so.
And it will bring some potential advantages. All your tax information will be held in one digital account and you will no longer need to report to HMRC things they know already. All that generally seems positive to us, as long as it works as advertised and that may take more time than currently proposed. It will however also force self-employed businesses and landlords to keep their accounting records using commercial software in order to report to HMRC quarterly. That will represent an additional burden but could reap benefits in the longer term if businesses learn how to use the reporting functions of the software solutions on offer. But it’s an enforced charge an dis unlikely to be popular.
Replacing One Tax Return with Four (or five)?
So will the end of the tax return will mean four deadlines instead of one, with a potential additional reconcilation at the end of the accounting year? It may look like that and some additional work will almst certainly need to be done. The devil as ever lies in the detail – and some significant issues are not yet finalised. We will do everything we can to keep you informed of develpments as they are released.
One Tax Payment or Four?
At present HMRC say there are no plans to change the due date for paying tax and the new ‘opportunity’ to pay tax quarterly is only ever planned to be voluntary. It remains to be seen whether that view is revised once the system is up and running. We will watch this issue wih great interest!
So, watch this space. The end of the tax return is coming but whether that makes tax filing easier for everyone remains to be seen.