HMRC Digitalisation = End of the Accountant?
HMRC has issued details about its Making Tax Digital project which aims to help millions of businesses to get their tax bills right first time, without the need for an annual tax return. Sounds great but what is behind it and what does it mean for our clients?
So HMRC say that they know that the majority of businesses want to get their tax right first time but more than £8 billion a year is currently lost in tax as a result of avoidable taxpayer error by small businesses. Big number that, but then Vodafone got away with a huge amount of tax and penalty recently, when they settled their case with HMRC it’s a pity HMRC still need to pick, on small businesses.
So HMRC believe that Making Tax Digital will help businesses to get their tax right first time; it will help reduce the likelihood of errors, lower the chance of unwelcome compliance checks and give them greater certainty that they are getting things right. HMRC surprisingly haven’t got the resources anymore to get out and check businesses as frequently so the fallback approach is create an IT system that requires more effort from business owners and saves HMRC time.
They also underestimate the real impact and costs of making the self employed and landlords file five tax returns per year. But the big win for HMRC is that with this digital approach HMRC get access to your monthly income and that means they know what you are earning real time and they can adjust benefit claims in real time as well. Also they get regular access to client bank account information something we as your accountant never give to HMRC.
Here at Beans we welcome improvements that help our clients and we are optimists. But this project is not all it seems and although our role in supporting our clients will inevitably change we don’t believe this will threaten the business owner and accountant relationship but as with previous big HMRC projects it will probably strengthen it. We will keep you informed and let you know the strengths and weaknesses of this project and its timings.