The Chancellor should use the Spring Budget to show support for business owners and entrepreneurs and delay the introduction of new systems for managing tax affairs through a digital account.
Friend Partnership Limited has issued the plea to Philip Hammond, as he believes business owners, companies and individuals are already battling significant regulatory red tape as part of the country’s already complex tax regime as he explains:
“It is critical that HMRC takes time to ensure that the proposed digital tax systems are effective and sufficiently robust, and not simply a tool to accelerate the receipt of taxation income into Treasury coffers.”
The changes are part of HMRC’s ‘Making Tax Digital’ project and will affect all UK taxpayers: OMBs, SMEs, large corporates, the self-employed, and individuals. Over the next 18-months, HMRC is believed to be planning to roll-out its plans that will require all businesses to deal with all aspects of their tax affairs online by 2020.
“The digital tax system will mean that business and ultimately individuals will have to manage their tax affairs through a digital account and report quarterly instead of at the end of the tax or accounting year as they do now”.
“Despite the new system scheduled to come in from April 2019, HMRC is still to confirm the exact details as to how it will work, and specifically the detail of the information companies and individuals will need to provide and with what software.
“The transition will require significant investment in time and resources by all businesses and any change to systems and software will need a budget and an implementation strategy.
“For the busy FD, Making Tax Digital amounts to another raft of activity and regulation to address, and resource. Clearly, the planned new four-times a year cycle has the potential to generate more work, but the lack of information and indeed, low confidence in HMRC’s ability to effectively implement the change and cialisfrance24.com operate the new online systems, means it is impossible for anyone to plan for it.”
We believe that the knock-on effects could be huge:
“The online tax system will doubtless affect financing plans as companies may well need to recruit additional resource for in-house finance and administration teams, or buy-in specialist advice to deal with it. There is the added risk of peaks and troughs in tax liability, and for seasonal businesses for example, HMRC hasn’t offered any guidance on how HMRC will expect taxpayers to deal with these kinds of fluctuations”.
“The busy and unrepresented taxpayers will simply struggle. Making Tax Digital will be just another process for companies and individuals to suffer, manage and resource”.
“With the Spring Budget looming large on the horizon, this is the perfect time and opportunity for the Chancellor to show that the government really is in-tune with UK business and entrepreneurs, and slow the Making Tax Digital implementation. HMRC need to take time to develop and test the necessary IT systems and deliver detailed guidance to all taxpayers. If this is not done there is a real risk that the Making Tax Digital project will at best give months of uncertainty and additional work and at worst be a complete failure..”
Click here for more information about HMRC’s ‘Making Tax Digital’ project.
Contact Friend Partnership on 0121 633 2000 or click here to email.
Since Friend Partnership Limited was established as a corporate finance boutique in 1983, it has grown into a well-respected Chartered Accountancy practice offering a full range of business advisory, accountancy and taxation advice and support services. It works principally with privately owned businesses operating nationally and internationally in a variety of sectors including manufacturing, technology, renewable energy, distribution, retail and construction, and range from entrepreneurial start-ups to well-established businesses.