taxes

Tax Return Changes Slated By Business Community

taxes

HMRC has had an initiative in place to make tax digital for a while now, but the latest plans have been criticised by the business industry. The department plans to change annual company tax returns to quarterly, a move which business groups say will place strain on administrative processes for small companies. The criticism comes days after HMRC gave digital tax accounts to every individual and small business owner within the UK.

A group who advises HMRC on how it can assist small businesses, the Administrative Burdens Advisory Board, were among those raising concerns about the new system- including the quarterly tax updates. In the group’s annual report, they said that they were supportive of the digital transition, but were disappointed with the plans to mandate digital record keeping alongside quarterly tax reports. They added that small companies make up approximately 99.3% of private sector businesses, and it is these businesses who will struggle the most with digital records as they may create more of a burden than the current record keeping processes.

The Federation of Small Businesses also spoke on the subject, stating that they believed the move will force owners of small businesses to pay for expensive accounting tools in order to keep up. The spokesperson said that forcing firms to pay for expensive software won’t help anyone, but instead make the cost of doing business in the UK more expensive.

It isn’t the first time that HMRC has been criticised for its digital tax plans. Back in January, the agency was forced to deny that it would force small businesses to submit quarterly tax returns following an online petition. The financial secretary to the Treasury also responded to the petition, repeating that the plans won’t mean four tax returns a year. Then, in March, the chairman of the Treasury committee said that he finds it hard to see how digital tax accounts will reduce admin costs for businesses by ¬£400m.

A spokesperson for HMRC said that the agency is focused on creating a tax system which is ‘more effective, more efficient’. The spokesperson added that ‘99% of businesses’ already file their corporation tax online, alongside 98% of VAT returns. Lastly, the spokesperson stressed that new digital accounts were not being introduced¬†until 2018 and all they will do is put different information into one simple system.

For more information about the digital tax transformation, call the Tax Return helpline.