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Plans to abolish annual tax return ‘overly ambitious’

The Government’s plans to abolish the annual tax return by next year are “overly ambitious”, according to tax experts.

Chancellor George Osborne said in his Budget speech this week that from next year, millions of people will have their tax automatically managed through online accounts.

Those with the most complex tax affairs will manage their accounts online.

Osborne said: “12 million people and small businesses are forced to complete a self-assessment tax return every year. It is complex, costly and time-consuming.

“We will abolish the annual tax return altogether. Businesses will feel like they are paying a simple, single business tax – and for most the information needed will be automatically received.

“Tax really doesn’t have to be taxing, and this spells the death of the annual tax return.”

BDO partner Dawn Register says: “To announce the ‘death of the annual tax return’ is rather premature. Many individuals and businesses with complex tax affairs will want to continue filing annual tax returns for many years to come.

“The estimate that this will be introduced in 2016 seems overly ambitious given the huge amount of infrastructure that still needs to be put in place. There will also be genuine concerns about the security of IT, the ability of HMRC to get accurate data flows and how people can correct inaccuracies.”

The Association of Chartered Certified Accountants head of taxation Chas Roy-Chowdhury says: “Even for relatively simple tax returns, a lot needs to happen between now and next year for HMRC’s systems to function properly and not fall down. We need to make sure that the IT works properly and the accuracy of the information is watertight.

“Many of those filing self-assessment forms have been using the postal method for years, and need to be given access to resources to help them move the process online.”

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Comments

There are 4 comments at the moment, we would love to hear your opinion too.

  1. As an accountant I see HMRC errors on a daily basis which are largely due to the de-skilling of the service which has come hand in hand with increased reliance on computers. This proposal is a joke!

  2. I have to agree – a frightening concept and to feel that one’s tax affairs have no beginning and no end…. impossible!

    It might be a horrible job once a year but do we want the pressure ‘all the time’?

    The concepts behind the strategy are not ones I can comprehend at the moment and really, simplifying the tax system itself could be the priority to make the annual job easier.

  3. Gwil Stephenson 20th March 2015 at 10:15 am

    This is inevitable … and accountants will see a fall in their work load … so you won’t like it. The current system is very very inefficient. You are lucky however that the government hasn’t chosen anywhere near the most efficient and secure system … they have chosen to centralise and this will cost a great deal and go wrong. Had they picked the alternative (which they appear to be ignorant of – although philosophically it is right up their street) then you would soon find your work slashed. The alternative is called “Tax and Benefit Account System” or more simply “Income Account System” … this uses banks current accounts slightly altered to allows Debit and Credit plus a new Transaction type (in and out / credit and debit). This would have involved little in the way of government computing, not be centralised, removed almost all tax forms and eventually the census form etc. … also made checking on someones UK employment status the responsibility of banks not employers. It must be presumed that too many vested interests, including accountants and bankers, as well as HMRC execs didn’t like the sound of this … so they choose the slow Stalinist route. The future is that their will be an entity (currently banks) that act as a ‘data bank’ between the individual, government and others. Almost all are ignorant of this but it is what will happen in about 10-20 years time. The UK could have gone into the fast lane on this … instead they chose the slow expensive lane!

  4. @Gwil – Interesting.

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