HMRC have recently issued 6 consultation documents outlining their proposals for a fundamental change to way they want individuals and business to submit their tax return information. If implemented as planned this will be the biggest change to the tax system since the introduction of Self-Assessment 20 years ago.
The proposals are to move to a more electronic based system where as much information as possible is automatically gathered directly from third parties. The taxpayer will then only be required to update information which cannot be obtained automatically from elsewhere. However, these updates will have to be made on a quarterly basis instead of the current system of providing information after the year end on the annual tax return.
By embracing the technology now available, HMRC hope to improve the tax system by:
- reducing the costs of assessing and collecting tax
- cutting out duplication of work for the taxpayer by avoiding the need to provide information already held by HMRC
- reducing the time delay between the receipt of income and the payment of tax
HMRC are eager to point out the benefits of the new system to the taxpayer, but if the proposals are introduced as planned the reality will be that many people will pay tax much earlier than they do now and their compliance burden will increase.
What do you think?
We will be responding to HMRC’s consultation and making representations on our clients behalf and invite you to let us have your views.
See our summaries of each of the consultations:
- Making Tax Digital: Tax Administration
- Making Tax Digital: Transforming the tax system through better use of information
- Making Tax Digital: Voluntary Pay As You Go
- Making Tax Digital: Bringing business tax into the digital age
- Making Tax Digital: Simplifying tax for unincorporated businesses
- Making Tax Digital: Simplified cash basis for unincorporated property businesses
Please email us on MTD@goodmanjones.com with your views.