Self Employed Tax Returns - 4 times a YEAR???
- Thread starter UK Contractor Accountant
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It will be interesting to see what they propose. If its a P & L account then it just means businesses will need to be more on the ball and buy an extra 3 pairs of shoes!
If it's a full self assessment then I can sees fees either doubling or tripling, even with taking into account pre-population. If I'm doing the return I will consider it part of my role to double check HMRC figures, as they have been known to get it wrong on occasion
Although I submit very few CT600's (just the uncomplicated ones lol) I'm particularly interested how this will affect things for small business directors. Is the system geared up for that? I'd be surprised if they are going to demand accounts 4 times a year, but you never know.
What I do think will happen is that small business owners will be increasingly reliant on the figures produced by cloud accounts, with the option to submit accounts on the fly, direct to HMRC. Going by some of the stuff I've read, this is the option HMRC are keen to push.
Of course, cloud accounts will only be as good as the information inputted, so interesting times ahead
If it's a full self assessment then I can sees fees either doubling or tripling, even with taking into account pre-population. If I'm doing the return I will consider it part of my role to double check HMRC figures, as they have been known to get it wrong on occasion
Although I submit very few CT600's (just the uncomplicated ones lol) I'm particularly interested how this will affect things for small business directors. Is the system geared up for that? I'd be surprised if they are going to demand accounts 4 times a year, but you never know.
What I do think will happen is that small business owners will be increasingly reliant on the figures produced by cloud accounts, with the option to submit accounts on the fly, direct to HMRC. Going by some of the stuff I've read, this is the option HMRC are keen to push.
Of course, cloud accounts will only be as good as the information inputted, so interesting times ahead
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I foresee a market for three monthly Simplex books so you'll only have to look at each one once!
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don't know if anyone has seen this
https://www.gov.uk/government/uploa...hment_data/file/484668/making-tax-digital.pdf
https://www.gov.uk/government/uploa...hment_data/file/484668/making-tax-digital.pdf
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Its kite flying.
HMRC still cannot reconcile CIS between Contractor and Subcontractor accounts on an annual basis.
Once they are trying to balance seasonal workers and a few other things their heads will explode.
Quarterly PAYMENTS I can understand : it will take the pressure off January and smooth the Governments cashflows
but only a Central London wonk thinks that businesses are smooth across the year
HMRC still cannot reconcile CIS between Contractor and Subcontractor accounts on an annual basis.
Once they are trying to balance seasonal workers and a few other things their heads will explode.
Quarterly PAYMENTS I can understand : it will take the pressure off January and smooth the Governments cashflows
but only a Central London wonk thinks that businesses are smooth across the year
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My biggest concern, thinking about it, is some deranged, out of control computer, deciding that I'm making a highly taxable fortune in the middle of summer, and wanting it's cut, without having the intelligence to realise that, come winter, I'm making peanuts.
Actually putting the tax return in every three months, wouldn't be too bad for me, and might even work out better than annually.
I suppose we'll just have to wait and see if HMRC see fit to explain how exactly it will be implemented.
Actually putting the tax return in every three months, wouldn't be too bad for me, and might even work out better than annually.
I suppose we'll just have to wait and see if HMRC see fit to explain how exactly it will be implemented.
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I've signed it. They're close to the 100,000 which considering this only impacts small businesses shows how seriously people are taking it. I wrote to my MP back when it was announced but have yet to receive a reply clarifying the scope of the submissions that will be required. If some thought doesn't go into reducing the burden or exempting very small businesses it's likely to have a big impact. Seeing businesses spend 5% of revenue on red tape (probably a realistic result of this for the smallest) is something everyone should be strongly against.
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The government has responded to the petition.
Dear XXXXX,
The Government has responded to the petition you signed – “Scrap plans forcing self employed & small business to do 4 tax returns yearly”.
Government responded:
Making Tax Digital will not mean ‘four tax returns a year’. Quarterly updates will largely be a matter of checking data generated from record keeping software or apps and clicking ‘send’.
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.
At the March 2015 Budget the government committed to transform the tax system by introducing simple, secure and personalised digital tax accounts, removing the need for annual tax returns.
At the 2015 Spending Review the government announced it would invest £1.3bn in HMRC to make this vision a reality, transforming HMRC into one of the most digitally advanced tax administrations in the world.
One element of this vision will be asking most businesses, self-employed people and landlords to keep track of their tax affairs digitally and update HMRC at least quarterly via their digital tax account.
Many taxpayers have told HMRC that they want more certainty over their tax bill, and don’t want to wait until the end of the year, or even longer, before knowing where they stand with their taxes.
We also estimate that £6.5bn in tax goes unpaid every year because of mistakes made when filling in tax returns. These reforms will make it easier for taxpayers to maintain accurate and up-to-date tax affairs, reducing the scope for error.
With businesses keeping track of their tax affairs digitally, quarterly updates will be fundamentally different from filling out an annual tax return in a number of crucial respects:
• Quarterly updates will not involve all the complexity of a full tax return. The updates will be generated from existing digital business records. In most cases, little or no further entry of information will be needed. It will be much quicker to complete than the current tax return.
• As part of the process the business owner or individual 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. This differs from the current system where many taxpayers are caught out by their tax bill when it finally arrives.
• In-year updates will not be subject to the same sanctions for lateness or inaccuracies as apply now to the year-end position. HMRC will consult during 2016 on what sanctions might be appropriate for a more digital tax administration.
The government has already announced that these measures will not apply to individuals in employment or pensioners, unless they have secondary incomes of more than £10,000 per year from self-employment or property.
The reforms will rely on businesses, self-employed people and landlords using software or apps that can connect securely to their digital tax account. The government will ensure that free products are available. The Gov.UK service will signpost taxpayers to the right product, with clear HMRC guidance about how to choose software.
HMRC will ensure support is available for people to get online if they need it. We will also provide alternatives for those who genuinely cannot use digital tools, like telephone filing. This will build on our Needs Extra Support service, which has gone from strength to strength in helping more vulnerable customers.
We’re introducing these reforms gradually. We’ve been in discussion with stakeholders since March 2015 and will be consulting on the details of the proposals throughout 2016.
We will use volunteers to test the new tools and processes and give us feedback. Quarterly updates will be introduced for some from 2018, and will be phased in fully by 2020, giving taxpayers time to adapt.
We want to work with all stakeholders to ensure these changes work for them. For more information about the proposed reforms please search for ‘Making Tax Digital’ on Gov.UK or use the following link:
https://www.gov.uk/government/publications/making-tax-digital
HMRC
This petition has over 100,000 signatures. The Petitions Committee will consider it for a debate. They can also gather further evidence and press the government for action.
The Committee is made up of 11 MPs, from political parties in government and in opposition. It is entirely independent of the Government. Find out more about the Committee: https://petition.parliament.uk/help#petitions-committee
Thanks,
The Petitions team
UK Government and Parliament
Dear XXXXX,
The Government has responded to the petition you signed – “Scrap plans forcing self employed & small business to do 4 tax returns yearly”.
Government responded:
Making Tax Digital will not mean ‘four tax returns a year’. Quarterly updates will largely be a matter of checking data generated from record keeping software or apps and clicking ‘send’.
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.
At the March 2015 Budget the government committed to transform the tax system by introducing simple, secure and personalised digital tax accounts, removing the need for annual tax returns.
At the 2015 Spending Review the government announced it would invest £1.3bn in HMRC to make this vision a reality, transforming HMRC into one of the most digitally advanced tax administrations in the world.
One element of this vision will be asking most businesses, self-employed people and landlords to keep track of their tax affairs digitally and update HMRC at least quarterly via their digital tax account.
Many taxpayers have told HMRC that they want more certainty over their tax bill, and don’t want to wait until the end of the year, or even longer, before knowing where they stand with their taxes.
We also estimate that £6.5bn in tax goes unpaid every year because of mistakes made when filling in tax returns. These reforms will make it easier for taxpayers to maintain accurate and up-to-date tax affairs, reducing the scope for error.
With businesses keeping track of their tax affairs digitally, quarterly updates will be fundamentally different from filling out an annual tax return in a number of crucial respects:
• Quarterly updates will not involve all the complexity of a full tax return. The updates will be generated from existing digital business records. In most cases, little or no further entry of information will be needed. It will be much quicker to complete than the current tax return.
• As part of the process the business owner or individual 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. This differs from the current system where many taxpayers are caught out by their tax bill when it finally arrives.
• In-year updates will not be subject to the same sanctions for lateness or inaccuracies as apply now to the year-end position. HMRC will consult during 2016 on what sanctions might be appropriate for a more digital tax administration.
The government has already announced that these measures will not apply to individuals in employment or pensioners, unless they have secondary incomes of more than £10,000 per year from self-employment or property.
The reforms will rely on businesses, self-employed people and landlords using software or apps that can connect securely to their digital tax account. The government will ensure that free products are available. The Gov.UK service will signpost taxpayers to the right product, with clear HMRC guidance about how to choose software.
HMRC will ensure support is available for people to get online if they need it. We will also provide alternatives for those who genuinely cannot use digital tools, like telephone filing. This will build on our Needs Extra Support service, which has gone from strength to strength in helping more vulnerable customers.
We’re introducing these reforms gradually. We’ve been in discussion with stakeholders since March 2015 and will be consulting on the details of the proposals throughout 2016.
We will use volunteers to test the new tools and processes and give us feedback. Quarterly updates will be introduced for some from 2018, and will be phased in fully by 2020, giving taxpayers time to adapt.
We want to work with all stakeholders to ensure these changes work for them. For more information about the proposed reforms please search for ‘Making Tax Digital’ on Gov.UK or use the following link:
https://www.gov.uk/government/publications/making-tax-digital
HMRC
This petition has over 100,000 signatures. The Petitions Committee will consider it for a debate. They can also gather further evidence and press the government for action.
The Committee is made up of 11 MPs, from political parties in government and in opposition. It is entirely independent of the Government. Find out more about the Committee: https://petition.parliament.uk/help#petitions-committee
Thanks,
The Petitions team
UK Government and Parliament
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0
J
john1989
Telephone filing is a great idea, apart from the fact nobody at HMRC answers the phone.
I think HMRC think that data input into software by clients is perfect and ‘ready to go’. Reality is much different.
It seems that HMRC have failed to understand the difference between bookkeeping, accounts preparation and tax computations. I can’t see this going well.
I think HMRC think that data input into software by clients is perfect and ‘ready to go’. Reality is much different.
It seems that HMRC have failed to understand the difference between bookkeeping, accounts preparation and tax computations. I can’t see this going well.
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0
Telephone filing is a totally dreadful idea. I take it that you've never had to file a return for the Office of National Statistics using their automated telephone system, which would surely be the model followed by HMRC.
It I told you what I really thought of it, I'd have to give myself a warning!
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Agree completely. As far as the government is concerned if 100,000 people sign a petition, it means that something like 55,000,000 people didn't sign it, so they'll carry on.
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- Original Poster
- #29
ACCOUNTING body UK200Group has moved to quash fears that HMRC plans to force SMEs and the self-employed into submitting quarterly tax returns.
The move comes in response to a petition against the taxman's proposals. On 16 December, a small business owner named Paul Johnson created an online petition slamming the possibility of HMRC enforcing quarterly tax returns.
Johnson claimed that small businesses across the country would suffer from additional red tape, accountancy fees and potential hefty fines if the rule came into force.
"As a small business owner myself I already spend quite some time to get things in order once a year," explained Johnson."At the moment we pay £1,200 a year in accountancy fees this figure will greatly increase. The Conservatives are not working for small businesses in brining such legislation but adding burden."
The petition currently has over 104,000 signatures, so will eventually be debated in parliament.
During last year's Autumn Statement, George Osborne indicated that quarterly returns for SMEs and self-employed taxpayers could be a possibility, coinciding with the government's £1.3bn digital overhaul of HMRC, which has already caused the closure of 137 tax offices.
Some advisers have already outlined their fears towards HMRC's digital tax accounts, with Elaine Clark, founder of CheapAccounting.co.uk, admitting that it will initially be a ‘nightmare' for clients.
No return is required
Andrew Jackson, senior partner at UK200Group member firm Fiander Tovell, has quashed fears that quarterly tax returns may be required, highlighting "that the new rules that are being protested about have not yet been written."
"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," said Watkins.
"However, this all assumes that the position sketched out by HMRC is going to be an absolute requirement.
"Given that the details are yet to be discussed, I have so far assumed that HMRC's sketch is of the ideal position, which might be achievable, rather than the initial one which would be mandated. This seems to be borne out by HMRC's initial response to the petition.
"Looking at the proposals in more depth, all we really have is the suggestion that taxpayers should have an online account, which can be used to keep HMRC up to date with their tax affairs, and that this might mean that no return is required in many cases. I can see that working well."
Jonathan Russell, partner at UK200Group member firm ReesRussell has hit out at HMRC, claiming that this petition highlights government's "lack of understanding of accounting and small businesses".
"Government seem to think that preparation of accounts is a five minute job which it might be if done on a cash basis, but that is not what they have asked for, except in micro accounts, and then accounts preparation is much more complex and time consuming.
"While we await details, it seems the current suggestion is that businesses will prepare and file quarterly accounts to the same level of detail most small businesses only do at their annual accounts.
"Many small businesses are not capable of preparing financial accounts to this detail and have to engage professional help and unfortunately the work involved to produce a quarters accounts is almost as much as to do it for a year," continued Russell.
Potential cost to SMEs?
The Forum of Private Business predicts that the quarterly filing regime would cost some small businesses an extra £600 in accounting fees, with experts warning that the cost could eventually rise to as much as 150%.
Despite officially having 18 days to respond to the petition, a HMRC spokesperson has already released a statement which says that there will be no need for people to submit four returns a year, with tax updates being generated throughout the year based on ‘existing digital business records'.
"Making Tax Digital will not mean ‘four tax returns a year'. Quarterly updates will largely be a matter of checking data generated from record keeping software or apps and clicking ‘send'," said the response.
"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," continued the tax authority.
The spokesperson explained that quarterly updates will eventually be introduced for some UK taxpayers by 2018, and the rule will be fully phased in by 2020.
The move comes in response to a petition against the taxman's proposals. On 16 December, a small business owner named Paul Johnson created an online petition slamming the possibility of HMRC enforcing quarterly tax returns.
Johnson claimed that small businesses across the country would suffer from additional red tape, accountancy fees and potential hefty fines if the rule came into force.
"As a small business owner myself I already spend quite some time to get things in order once a year," explained Johnson."At the moment we pay £1,200 a year in accountancy fees this figure will greatly increase. The Conservatives are not working for small businesses in brining such legislation but adding burden."
The petition currently has over 104,000 signatures, so will eventually be debated in parliament.
During last year's Autumn Statement, George Osborne indicated that quarterly returns for SMEs and self-employed taxpayers could be a possibility, coinciding with the government's £1.3bn digital overhaul of HMRC, which has already caused the closure of 137 tax offices.
Some advisers have already outlined their fears towards HMRC's digital tax accounts, with Elaine Clark, founder of CheapAccounting.co.uk, admitting that it will initially be a ‘nightmare' for clients.
No return is required
Andrew Jackson, senior partner at UK200Group member firm Fiander Tovell, has quashed fears that quarterly tax returns may be required, highlighting "that the new rules that are being protested about have not yet been written."
"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," said Watkins.
"However, this all assumes that the position sketched out by HMRC is going to be an absolute requirement.
"Given that the details are yet to be discussed, I have so far assumed that HMRC's sketch is of the ideal position, which might be achievable, rather than the initial one which would be mandated. This seems to be borne out by HMRC's initial response to the petition.
"Looking at the proposals in more depth, all we really have is the suggestion that taxpayers should have an online account, which can be used to keep HMRC up to date with their tax affairs, and that this might mean that no return is required in many cases. I can see that working well."
Jonathan Russell, partner at UK200Group member firm ReesRussell has hit out at HMRC, claiming that this petition highlights government's "lack of understanding of accounting and small businesses".
"Government seem to think that preparation of accounts is a five minute job which it might be if done on a cash basis, but that is not what they have asked for, except in micro accounts, and then accounts preparation is much more complex and time consuming.
"While we await details, it seems the current suggestion is that businesses will prepare and file quarterly accounts to the same level of detail most small businesses only do at their annual accounts.
"Many small businesses are not capable of preparing financial accounts to this detail and have to engage professional help and unfortunately the work involved to produce a quarters accounts is almost as much as to do it for a year," continued Russell.
Potential cost to SMEs?
The Forum of Private Business predicts that the quarterly filing regime would cost some small businesses an extra £600 in accounting fees, with experts warning that the cost could eventually rise to as much as 150%.
Despite officially having 18 days to respond to the petition, a HMRC spokesperson has already released a statement which says that there will be no need for people to submit four returns a year, with tax updates being generated throughout the year based on ‘existing digital business records'.
"Making Tax Digital will not mean ‘four tax returns a year'. Quarterly updates will largely be a matter of checking data generated from record keeping software or apps and clicking ‘send'," said the response.
"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," continued the tax authority.
The spokesperson explained that quarterly updates will eventually be introduced for some UK taxpayers by 2018, and the rule will be fully phased in by 2020.
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Typical garbage from HMRC. For a start many clients do not have record keeping software or apps, and wouldn't know how to use it if they did.
Then the idea that you can simply hit send and upload transactions from your accounts software shows a total misunderstanding of how most people keep records. In many, if not most, of the cases that we deal with the data as submitted to us for accounts prep is simply not fit for purpose in terms of submission to HMRC.
There is a whole host of adjustments that might have to be made - not all of them relevant to every case - and many of these are simply incorrect understanding of accounts rather than out and out mistake, whch of course happen as well. We point out the correct method, but they just carry on.
The job that I've just finished had the trading loss reduced by about 70%. Of course things can go the other way as well
If clients submit 3 times by pressing a button and then we prepare the final accounts and the result is materially different from the "interim" figures, will HMRC just accept that's the way things are, or will they launch an enquiry into the apparent anomalies in quarter 4.
And of course we have the usual weasel words "Updating HMRC through software or apps will deliver a light-touch process, much less burdensome and time-consuming than it is today" Utter, utter garbage. The final accounts will still be prepared properly so the work is exactly the same as today, plus they add the burden of three extra filings and (odds on) a shortened filing period for the final quarter.
It reminds me of the brain dead HMRC clown who claimed that filing 52 weekly RTI reports (all with penalties for missing them, of course) was less burdensome that making one annual return after the year end.
Then the idea that you can simply hit send and upload transactions from your accounts software shows a total misunderstanding of how most people keep records. In many, if not most, of the cases that we deal with the data as submitted to us for accounts prep is simply not fit for purpose in terms of submission to HMRC.
There is a whole host of adjustments that might have to be made - not all of them relevant to every case - and many of these are simply incorrect understanding of accounts rather than out and out mistake, whch of course happen as well. We point out the correct method, but they just carry on.
The job that I've just finished had the trading loss reduced by about 70%. Of course things can go the other way as well
If clients submit 3 times by pressing a button and then we prepare the final accounts and the result is materially different from the "interim" figures, will HMRC just accept that's the way things are, or will they launch an enquiry into the apparent anomalies in quarter 4.
And of course we have the usual weasel words "Updating HMRC through software or apps will deliver a light-touch process, much less burdensome and time-consuming than it is today" Utter, utter garbage. The final accounts will still be prepared properly so the work is exactly the same as today, plus they add the burden of three extra filings and (odds on) a shortened filing period for the final quarter.
It reminds me of the brain dead HMRC clown who claimed that filing 52 weekly RTI reports (all with penalties for missing them, of course) was less burdensome that making one annual return after the year end.
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Here is a link to yesterday's debate on the petition "Scrap plans forcing self employed & small business to do 4 tax returns yearly"
http://goo.gl/KVEvcv
If you have 3 hours spare........
http://goo.gl/KVEvcv
If you have 3 hours spare........
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I agree entirely with David Griffiths. Whilst change is inevitable, and it's right to move over to digital accounting, the proposal as such, from what I have seen so far, is that peeps will have to keep their accounts up to date, and on such software that links to HMRC (no wonder the likes of Xero and Kashflow are gushing over this) on the fly.
What scares me (and I'm sure David as a Xero Accountant will agree) is that the data inputted into cloud software by the business owner, will not (usually) be the same figures that a bookkeeper or accountant will likely be submitting, even on a quarterly basis. Yet it is likely that HMRC will rely on those figures as fact and base tax around it. Not a slur on business owners, they are in business to make profit around their chosen skillset, and leave it to the accountant to rectify anomalies at year end.
Only ever done one xero account. The Directors were funding the business as shares instead of DLA, easily rectified, but imagine HMRC getting that information on a quarterly basis!!!
I like Kevin's comment, tongue in cheek as it was; 3 x nil returns followed by a proper one at year end, but how likely are they to accept that? Not a cat in hells chance
What scares me (and I'm sure David as a Xero Accountant will agree) is that the data inputted into cloud software by the business owner, will not (usually) be the same figures that a bookkeeper or accountant will likely be submitting, even on a quarterly basis. Yet it is likely that HMRC will rely on those figures as fact and base tax around it. Not a slur on business owners, they are in business to make profit around their chosen skillset, and leave it to the accountant to rectify anomalies at year end.
Only ever done one xero account. The Directors were funding the business as shares instead of DLA, easily rectified, but imagine HMRC getting that information on a quarterly basis!!!
I like Kevin's comment, tongue in cheek as it was; 3 x nil returns followed by a proper one at year end, but how likely are they to accept that? Not a cat in hells chance
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