Discover how tax is going digital

Published: Wed, 11/04/15

Hi

You may recall that in the Spring Budget 2015 the Chancellor, George Osborne announced the ‘end of the tax return’ and HMRC published ‘Making Tax Easier: The end of the tax return’ Making tax easier - Publications - GOV.UK

This explains the Government’s vision to modernise the tax system, with digital tax accounts replacing tax returns for ten million individuals and five million small businesses.

The aim is that by the end of this Parliamentary term in 2020 every individual and small business will have access to their own ‘simple, secure personalised’ digital tax account which will bring into one place HMRC services and information. This will be ‘a fundamental transformation of the way in which taxpayers interact with the tax system’. HMRC hopes it will improve its service, bring about sustainable cost savings and maximise voluntary compliance. We hope it won’t mean more administration for businesses and their agents and througfh the ICAEW continue to press this point with HMRC and government.

With regard to small business, HMRC has said its strategic objectives are:
  • Integration: calculation and payment of tax becomes embedded within everyday business systems through the use of software/Apps promoting voluntary compliance
  • Simplification of its policy, products and processes across different taxes, helping businesses feel as though they are paying a single tax
  • Personalisation of services – digital account to help business customers comply by targeting support and information based on customer insight; and
  • Give and gain certainty that the right amount of tax has been paid.
And its vision is:
  • All 5 million small businesses have access to digital tax accounts.
  • Businesses link their software/apps to their digital account, providing a platform for the integration of tax reporting with other business activities.
  • Pop up messages will prevent errors. Some HMRC risk triggers will be embedded in the software too.
  • Information is sent to HMRC at the click of a mouse. In addition HMRC uses the data it already holds to pre-populate customer’s digital accounts.
  • This data is pooled across different taxes to produce a single, combined statement of tax due, making it feel like you are paying a single tax.
  • Customers can see their tax bill in near real-time and pay-as-they-go.
HMRC has stated that taxpayers will still be able to allow us, as agents, to manage these digital accounts on their behalf. 

In the summer, HMRC published both business and personal tax roadmaps which set outthe journey it is on to develop the digital tax accounts.  

We will keep you informed of developments in this area.

Noel Guilford

Noel Guilford is the principal of Guilford Accounting a small business accountancy practice specialising in advising owner-managed businesses on current accounting, finance, and tax matters. You can reach him via email at noel@guilfordaccounting.co.uk or by phone at 01244 660866. He is the author of the best selling book 'Figure it out - an entrepreneurs guide to understanding your business numbers' which you can obtain by visiting http://guilfordaccounting.co.uk/figureit out. His forthcoming book 'Know your business numbers' will be published December.