Many taxpayers will by now have completed their first quarterly MTD submissions and may be wondering what’s next on the horizon from the tax man. They won’t have too long to wait as hot on the heels of MTD, HMRC have issued a consultation on the “Timely Payments in Income Tax Self-Assessment”.

Essentially the consultation includes proposals to introduce in-year monthly or quarter tax payments for everyone in self-assessment rather than the existing system of half yearly payments in January and July.

It will come as no surprise to anyone who is already having to make an MTD submission that the intention to align tax payments with the quarterly submissions was firmly in the Governments sights from the outset. Perhaps more surprising are the proposals in the consultation to introduce monthly tax payments for all self-assessment taxpayers, either by adjustments to tax codes for those who have PAYE income sources or by direct payment for those outside of PAYE.

There is a clear and understandable motive for any government for wanting to accelerate the collection of tax. It has frequently been said that a tax delayed is a tax saved. The opposite is also true that tax paid earlier is additional money in the coffers. It is also a convenient way to raise funds without being seen to increase tax rates.

HMRC are keen to point out that there can currently be a 22-month delay between taxable activity taking place and tax being paid. Reducing that delay is clearly desirable for the chancellor, but it is a little disingenuous of HMRC to suggest that “many taxpayers in self-assessment” are in this position. It is also a little difficult to take HMRCs insistence that these proposals will be helpful to taxpayers making it easier to budget, “help mitigate the risk of early bill shock” and “support business sustainability during the initial stages of trading”. Cash flow when starting a business can be at its most difficult, and accelerated tax payments are not going to be helpful.

A practical difficulty with monthly in-year tax instalments is how to calculate them when tax liability is assessed on an annual basis after the year end when full income and expenditure information is known. The UKs tax legislation is now the most complex it has ever been and anyone with more than a single constant monthly source of income will not be able to calculate the correct monthly amount of tax during the tax year. A process of end of year adjustments will be needed which is likely will add confusion and uncertainty year after year with increasingly unfathomable tax coding notices for those within PAYE adding additional burden to hard pressed payroll departments.

Maybe a silver lining to this drive for monthly instalment will be that it will encourage HMRC to make their next goal one of genuine simplification of the overall tax system.