6 Jan 2016 04:47pm

Row over small business tax returns

HMRC has responded to an online petition against its new plans for small business tax returns, and said that suggestions it means quarterly tax returns are “simply wrong”

An online petition against the government’s new plans to introduce quarterly reporting for small businesses has reached the statutory number of signatories that could see a debate forced in parliament.

The petition created by small business owner Paul Johnson and posted on the government’s portal has reached over 100,000 signatories. According to the UK government petitions website a date for a debate should be decided in three days.

In the meantime however, HMRC has issued an online rebuttal to the petition, and says that the new rules would not constitute the equivalent of four tax returns a year. The proposals, which are due to be implemented by 2020, would see small businesses use an online portal to update HMRC on their tax affairs through software or apps, which is says will be “much less burdensome and time consuming than it is today”.

Andrew Jackson, head of tax at UK 200 Group member firm Fiander Tovell, argues that the petition is "premature", given that the new rules are yet to be clearly defined.

"There has been a lot of speculation in the press that the new regime would require all businesses to essentially have to file a tax return every three months, which would lead to all sorts of problems - from the sheer admin burden of doing four times the work, to the logical problems of reporting an annual profit quarterly. However, this all assumes that the position sketched out by HMRC is going to be an absolute requirement."

The UK 200 Group itself, which represents many of the UK's smaller accountancy firms, has said that although in-depth details are yet to be released, independent calculations show that the additional cost to business could be an extra £600 a year.

Mike Chapman, senior manager of corporate tax at UK200Group member firm Knill James Chartered Accountants said, “Both business taxpayers and tax professionals have reacted with alarm at the prospect of supplying current financial information online at least every three months by 2020. Even more disturbing is the clear intention that this information will be used to accelerate tax payment deadlines for unincorporated businesses, smaller companies and landlords.”

Chapman also questioned HMRC’s ability to deliver on the ambitious IT project that would facilitate online tax accounts.

He said, “Why should anyone trust HMRC to be able to achieve such lofty IT goals when the department has recently been publically criticised for a failure to answer phone calls in time.”

HMRC said in a statement, “Millions of businesses already manage their tax digitally with 98% of corporation tax returns and 99% of VAT returns submitted online. The new digital accounts simply integrate the different information businesses already provide to HMRC into a simple, streamlined system.

“This will reduce the burden and cost to business of keeping their tax affairs up-to-date and make it easier to spot mistakes. Suggestions that this means quarterly tax returns are simply wrong.”

Ellie Clayton


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