Firstly, WatkinsonBlack wish all readers a very happy and prosperous New Year. Late? Not at all. Accountants have three New-Years: 1st January, 1st February and, finally, 6th April.
We are now in a new tax year, and now have less than 12 months until “Making Tax Digital” starts in earnest. From 6th April 2018 many of you will find yourself in the position of needing to submit not one tax return each year but six, or eleven, or even 16!
The government have shown almost total immobility in their aim of introducing this massive change in the tax system in April 2018. This despite their failure to tell us, their customers, even now exactly what needs to be reported and when. This despite the fact that the House of Lords Economic Affairs Committee has expressed themselves to be “very puzzled” by the governments estimate of what this measure will cost you, the taxpayer (They said that the estimate of the cost to the taxpayer were based on “a very elegant piece of analysis and modelling” but not on “facts”). This despite the fact that the final submission under HMRC’s pilot (test) will not be made until 9 months after Making Tax Digital is introduced, making the pilot as much use as a snowball in hell.
One thing that has become clear over the past few weeks is that taxpayers caught by this new regime will see the reports that they are required to submit to HMRC increasing from one a year to at least six! Besides the much-heralded quarterly reports, it now become clear that an “End of Period Statement” is required followed by a “Final Declaration”, making six in total.
However, another thing that has become clear is that the quarterly reports and End of Period Statement will need to be submitted by a taxpayer for each source of income. So a sole trader will need to submit 6 reports. That same sole trader with rental income will need to submit reports separately for his sole trade and his rental income, making a total of 13 reports. Add another source, add another 5 reports, and so on.
As usual, there will be penalties for any taxpayers failing to make their reports on time. It is doubtful whether there will be compensation for HMRC’s failure to deal accurately and timely with the avalanche of information that they will receive, a fear expressed by the House of Lords.
So much for tax simplification!
WatkinsonBlack have considerable experience in all areas of taxation and businesss services, including providing a very cost-effective payroll bureau service. If you want to arrange a no-obligation initial meeting on any taxation or accounting matter then please contact us. Please note that these ideas are intended to inform rather than advise and you should always obtain professional advice before taking any action.
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