New tax rules will not mean quarterly tax return, government assures » SMEInsider

New tax rules will not mean quarterly tax return, government assures

SMEs and self-employed people will not have to file full quarterly tax returns, the government has stated.

In this morning’s response to growing concern over its plans to reform the tax system, which would oblige many to submit financial data to HMRC every three months, the government pledged that these quarterly updates “will not involve all the complexity of a full tax return”, and “will be much quicker to complete”.

“Making Tax Digital will not mean ‘four tax returns a year’. Quarterly updates will largely be a matter of checking data generated from record keeping software or apps and clicking ‘send’,” the response said.

“These reforms will not mean that businesses have to provide the equivalent of four tax returns every year. Updating HMRC through software or apps will deliver a light-touch process, much less burdensome and time-consuming than it is today.”


Petition pushes debate

The comments come following a petition set up in December, calling on ministers to scrap plans to force SMEs and the self-employed to do four tax returns every year. On Sunday, the petition had gained more than 100,000 signatures, meaning it must now be debated in parliament.

Last week, experts warned that the burden of the new rules would push some small firms and self-employed workers to the brink, with the cost of filing tax returns rising by between 20 and 150 per cent. Up to four million people will be affected if the changes are approved.

Commenting on the petition, which currently has almost 104,000 signatories, the government attempted to quell concerns.

It said that free apps and software will be available for people to keep up to date with a digital tax account, which would enable simple and hassle-free regular reporting of their financial position without the need for entering further information in most cases.


Minimising errors

“Many taxpayers have told HMRC that they want more certainty over their tax bill, and don’t want to wait until the end of the year, or even longer, before knowing where they stand with their taxes,” the response continued.

“We also estimate that £6.5bn in tax goes unpaid every year because of mistakes made when filling in tax returns. These reforms will make it easier for taxpayers to maintain accurate and up-to-date tax affairs, reducing the scope for error.”

It added that support will be available to get online for people who need it.