HMRC’s plans to introduce quarterly filing will “substantially increase the administrative burdens” for small firms, a business group has claimed.
The Administrative Burdens Advisory Board (ABAB), a group that advises HMRC on how to support SMEs, made the statement just days after the launch of the taxman’s ‘Make it Digital’ initiative, which includes the duty upon self-employed people to file tax updates every quarter.
In its annual report, the ABAB said: “Whilst we recognise and are supportive of the need to move to digital and the potential this brings, we are disappointed with the announcement to mandate digital record keeping and quarterly online reporting for even the smallest businesses as part of Making Tax Digital for Business.”
Keeping digital records could prove more burdensome than the current system for many of the smallest businesses, the group added, which will leave them struggling to comply.
According to the Federation of Small Businesses (FSB), small firms make up 99.3 per cent of all private sector companies. The FSB’s chairman Mike Cherry claimed that the new tax rules would force SMEs to use costly accounting tools.
‘Substantial’ burden for small firms
Cherry said: “Forcing small firms to pay for expensive digital accounting software so they must submit extra tax returns is not going to help anyone.
“It will simply add to the cost of doing business in the UK. These proposals will also substantially increase administrative burdens – particularly for the smallest businesses.”
The news follows widespread criticism earlier this year into the government’s rumoured plans to compel SMEs to submit a tax return four times a year. In March, doubt was cast over claims that digitising the tax system would slash £400 million from businesses’ admin costs.
Most do it digital already
An HMRC spokesperson told Accountancy Age: “We are focused on creating a tax system that is more effective, more efficient and easier for taxpayers and we will work closely with stakeholders to address their concerns.
“Ninety-nine per cent of businesses already file their corporation tax online and 98 per cent of VAT returns are filed online.
“The new digital accounts, which are not being introduced until 2018, will simply integrate the different information businesses already provide to HMRC into a simpler, streamlined system. This will reduce the burden of updating HMRC for small businesses.”