George Osborne announced in his Autumn statement the plan for self employed and small businesses to have to file four tax returns a year rather than one as currently is done.

Each self employed individual and small business will have the added burden of additional red tape, accountancy fees and potential for fines. As a small business owner myself I already spend quite some time to get things in order once s year. There will be greater chance of errors as well. The conservatives are not working for small businesses in bringing such legislation but adding burden. Its a royal pain in the arse doing it once a year never mind this x4.

Sign here FWIW
https://petition.parliament.uk/petitions/115895

I struggle to do one a year…which reminds me…

Mine is a sideline so this might be enough for me to decided that it’s just not worth bothering with.

Signed!

Signed and MP written to.

Signed. I didn’t know the Conservatives were the party of red tape.

All govt loves red tape, it’s what keeps them in a job.

And it’s big business that doesn’t like small businesses and the self-employed (+contractors), as we can undercut them – they also have the ‘ear’ of senior Ministers…

Signed, one is bad enough!

What’s the Government’s reason for wanting to introduce this?

Signed. It’s just extra burden for no good reason and surely a waste of public money as more work for them at a time when Revenue staff are being cut back.

What’s the Government’s reason for wanting to introduce this?

Millions of self-employed people will have to file tax returns four times a year as part of a £1.3 billion digital overhaul at HM Revenue and Customs.
Landlords and small businesses will also be subject to quarterly returns normally associated with large publicly traded companies from 2018.
The government has claimed that the measures, which were set out in the autumn statement, will raise an additional £600 million in revenue by the end of this parliament and make it easier to file tax returns…

I’ve no idea how they think it will increase revenue, it will increase my costs, reduce my turnover as I take time out to prepare my accounts thereby reducing what little profit we make reducing corporation tax we pay.

It might just improve cash flow for the government.

Muppets.

As I understand it they won’t improve cash flow as only one payment a year just four returns, although it sounds like an inevitable stepping stone.

The aim as I understand it is to remove the massive year end pressure on Hmrc, you can imagine that from now until end Jan they get millions of enquiries from people who have been too disorganised to deal with their accounts since April, then there is a huge job for them to do in sorting out any mess for a month or tow and then everyone ignores self assessment for the next 9 months; smoothing that seasonality makes some sense.

I find it hard to believe it’s actually going to have a huge hit on costs to make four smaller returns evenly spaced throughout the year rather than one big one at the end. Afterall many of those people are making quarterly vat returns anyway.

The other benefit from a government perspective is visibility on expected income. How do you plan expenditure when you have no idea the income until 30 Jan.

I suspect it may also help discourage some of the ir35 dodgy contractors to stop avoiding tax and just become employees, which my gut feel says would increase total revenue.

Smoothing out the workload makes sense. It might even make it simpler for those submitting returns as there will only be 3 months worth of stuff to go through each time.

But it would also be 4 x accountant fees every year..

Cheaper for hmrc free staffing for constant work as opposed to peaks and troughs.

Signed.

Cloudnine, (a) you don’t actually need an accountant, (b) why will the total time (and thus total fee) be four times as much for the accountant, (c) with the spreading out the workload you might find accountants are a little less stretched at the year end… And thus more flexible on pricing – especially for longer term relationships rather that ad hoc who’s cheapest in January!

I think the problem you will have getting public support for your objection is:

Most businesses with c.20 or more people will already have systems in place that can cope with this without too much bother.

The vast majority of the public are paying tax every month – the self employed get to sit on their tax for over a year.

There is a public perception that anyone with an accountant is scamming the system a little bit compared to the honest hardworking man paying PAYE.

The retired population won’t care. Even those who might have an interest will be more concerned about the big businesses what support the pension funds!

Those on benefits and minimum wage really aren’t going to lose sleep over you.

Now the details haven’t been published yet, and will go out to consultation so I would say it is premature to reject a concept before anyone knows the details.

The gov wants to crack down on “self employed” people who are in reality working fulltime, long-term for companies, who want to avoid paying tax as per an employee.
IF they make it easy to do online, then I’d support the initiative.
But if it just means more work for accountants, and more stress for the genuine self-employed, then it is a mistake.
I’d be more favourable to HMRC if they properly went after Facebook and Google beforehand.

I suspect it may also help discourage some of the ir35 dodgy contractors to stop avoiding tax and just become employees, which my gut feel says would increase total revenue.

I would have thought the current requirement to register PAYE payments with hmrc on a monthly basis would be a bigger driver.

A big part of this will be about digital transformation and cutting costs for HMRC. Accountants will have to get with the programme and provide more efficient digital services which hook into HMRC’s systems – if they don’t already.

If your accountant uses this to quadruple their charges, find one that offers a better service.

Poly seems to make good sense. I will have a chat with the accountant.

Couldn’t they just move a quarter of us to the end of each 3 month period & still keep it annually?

Or abolish income tax and use VAT to collect direct and indirect. I know it’s not that easy but….

Mugboo – Member
Couldn’t they just move a quarter of us to the end of each 3 month period & still keep it annually?

They could, are you volunteering to be one of the group who makes their submission (and payment?) 9 months earlier than usual?

Signed!

MUTDz

Poly, I’d be interested to understand why so supportive of the idea? 🙂

I usually have to file a tax return. Because I only have to do it once a year, and because my record-keeping is appalling, I hate it and it’s a shambles. It also feels like a big chunk of money relative to my January paycheque.

If I was disciplined enough to sort it out 4 times a year, I’m slightly confident that:

– I’d know my log-in details, or at least where to find them;
– it would take nearly no time to find al the bank statements I need;
– the system I use for slinging receipts into thematically-arranged envelopes would have been consistent since last time; and
– the amount I owe would be a much more manageable proportion of the money on current account that month.

My tax affairs are deeply uncomplicated really, but that’s my suspicion for how it’d go. 🙂

I also don’t have a problem with submitting 4 times per year, but then again I am fairly organised about it already & update my preadsheets weekly so my annual return only takes about 20 min.

^^^^ I want to be mattbee when I grow up.

🙂

But it would also be 4 x accountant fees every year..

More likely it’ll cost somewhere between 1 and 4 times your current fee, or if someone ‘retains’ an Accountant – an increase in the monthly cost, as it does require something been performed four times rather than once…

Signed.
I do no book keeping, my accountant gets my bank statement + invoice books in a plastic bag. I do no spreadsheets, don’t know how to and have no intention to learn how. This change will result in a massive increase in my accountancy bills. I understand Britain already has as many accountants as the rest of Europe put together (slight exaggeration for effect, but still..); so more administrators and less people actually making shit (might tip me and others over the edge!).

Personally I can’t see that it is going to reduce red tape and is just going to increase my accountancy costs (I think it’s wishful thinking to suggest my accountant will charge me the same). Can someone explain why the self employed and small businesses are singled out? Do larger companies put in four returns a year?

Do larger companies put in four returns a year?

It’s not technically targeting big vs small companies – it’s about the structure of the business. If you’re a limited company you have to pay Corporation Tax quarterly anyway.* If you’re a partnership or sole trader then you pay income tax annually on your profits.

Most small(er) businesses maybe aren’t incorporated, whereas almost all “large” ones are, so the effect of this is going to be felt by small businesses on the whole.

That’s my understanding anyway – I’m not an accountant though!

*Actually a bit of googling suggests that the quarterly payment of Corporation Tax might only apply to larger limited companies anyway… so not sure how small limited companies will be affected by this – someone will no doubt know more.

Squirrel – Member
Poly, I’d be interested to understand why so supportive of the idea?

I don’t think I have actually said I was “supportive of the idea” did I? What I did was point out some potential motivations for doing it which was a question someone asked.

If it reassures you I don’t work for HMRC / the Government, nor am I a member of the Conservative (or any other political) party. In fact I run a business which will have to comply with any new reporting regime (and no its not an accountancy – so there is no secret “upside” for me). HOWEVER, as far as I know the only thing anyone has seen describing these proposals is a couple of vague sentences (and this rather vague document https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/484668/making-tax-digital.pdf). I think it is premature to be signing petitions or getting concerned about it when nobody yet knows what the proposals will entail. As a general principle anything that makes the efficiency of reporting and collecting taxation is something I’d find hard to object to – anyone who has tried to contact HMRC in the last 12 months will certainly know that they need to sort themselves out.

Can someone explain why the self employed and small businesses are singled out? Do larger companies put in four returns a year?

Companies (or groups) with taxable profit > £ 1.5M are already reporting (and paying) quarterly as I understand it. You are not being singled out – you are catching up!

Personally I can’t see that it is going to reduce red tape and is just going to increase my accountancy costs (I think it’s wishful thinking to suggest my accountant will charge me the same).

Or perhaps the new digital services which will accompany the change will mean that you do it all yourself – you won’t need an accountant for the administrative end of things. Although you may still want to take the advice of a tax advisor.

https://hmrcdigital.blog.gov.uk/2015/12/17/personal-tax-account-goes-live/

I don’t know why they don’t go after peopl who don’t report their dividends – that must be a much more widely abused loophole the IR35. Oh wait I bet that;s all your basic toffs..

We have to do VAT returns 4 times a year and to be honest I don’t think a full return will take much longer if at all.

I don’t work for HMRC, but I am currently involved in a digital transformation programme for a significant public sector body doing similar things. Google Government Digital Service if you want to get an idea on where some of this may be going.

Yes, but the main reason the Govt is doing these kind of projects is to SAVE it’s money, and make IT more efficient. I’d like to see the ‘As Is’ & ‘To Be’ processes where it looks from our perspective, and our costs…

Most businesses with c.20 or more people will already have systems in place that can cope with this without too much bother.

Yes, but that’s an administrative burden spread over a company large enough to support 20 people’s wages.

The vast majority of the public are paying tax every month – the self employed get to sit on their tax for over a year.

You know how self assessment “payment on account” works, right? You don’t get to sit on tax for “over a year”. Those in employment may get taxed every month, but they also get paid every month, and don’t have to deal with the cash flow challenges of that many businesses face.

There is a public perception that anyone with an accountant is scamming the system a little bit compared to the honest hardworking man paying PAYE.

When the reality is that having an accountant is pretty much just a cost needed to deal with the compliance burden of being in business.

Like poly, I’m going to wait to see some details before reaching any conclusion on the new rules, but I’m skeptical.

My business was recently affected by a change in EU VAT rules that requires us to now submit 8 VAT returns a year, and track and charge the correct VAT rates of all EU member states. The cost of implementing this change for our business comfortably exceeded the revenue that was affected by these rules, never mind the tax. It would have been much cheaper to simply refuse to sell to consumers in other EU states. The correspondence from the government regarding these changes and the problems they were creating made it clear that the government had an extremely poor understanding of how small businesses actually work.

Yes, but the main reason the Govt is doing these kind of projects is to SAVE it’s money

That’ll be OUR money then

and make IT more efficient. I’d like to see the ‘As Is’ & ‘To Be’ processes where it looks from our perspective, and our costs…

I’m sure some of that will exist – perhaps you just need to ask?

poly – Member
I suspect it may also help discourage some of the ir35 dodgy contractors to stop avoiding tax and just become employees, which my gut feel says would increase total revenue.

Nothing dodgy about it, all perfectly legal, and it’s as much avoiding tax as using an ISA. If we want it to be wrong, make it illegal.

But more seriously, a lot of employers would not take them on the payroll. It’s a lot of overhead to their company (a point often lost to managers who moan contractors are expensive to their budget) and delays and burden in the hire and fire process, pay offs and redundancy to deal with, and if they just want someone temporary then they’re having to deal with temp agencies or offshore and end up with less quality and probable rework at high cost.

Of course there’s the “work inside IR35” option which is just utter crap for the contractor. It’s worse than just being an employee of the client. Pay the same tax and PAYE but get no employee benefits.