The Administrative Burdens Advisory Board (ABAB) has said it has serious concerns about the government’s proposals to introduce quarterly reporting, similar to tax returns, for businesses.
The body, which provides independent oversight of HM Revenue & Customs (HMRC) policies, said the quarterly updates will add an extra burden to businesses due to increased record keeping and compliance costs.
The move to include quarterly reporting is part of the government’s plans to make tax digital. This will mean that by 2020 most businesses, self-employed people and landlords will manage their taxes online (either directly or via their accountant if they have one) using digital accounts
During the Autumn Statement 2015 the Chancellor reiterated this commitment announcing that HMRC wants to be updated “at least quarterly” via these digital tax accounts; a point which has since been clarified in the government’s consultation document Making Tax Digital.
However, ABAB has also questioned the capability of the software required to deliver the move to digital tax accounts, which will need to be in place within just four years’ time.
In a speech delivered earlier this year, Financial Secretary to the Treasury David Gauke said that the reforms would “make it easier for business to understand how much tax they owe, giving them far more certainty over their tax position, helping them budget, invest and grow.”
In response the National Chairman of the Federation of Small Businesses, Mike 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.”
Glazers are keeping track of these proposals and developments, and we will continue to keep you up to date as the details unfold, and as changes come into effect.
Links: ABAB report – 2015/16