Abolishing Self Assessment tax returns - what does this mean for accountants?

monkeypuzzle47

Abolishing Self Assessment tax returns what does this mean for Accountants?

Diddy Mau

I though this was paper returns only. It means anyone who is an MIP is going to be a lot busier in January.

monkeypuzzle47

Quote from the Telegraph "The changes will mean that those with straightforward tax affairs will have no need to collect receipts and other documents. Only those who do not want to manage their affairs online will still have to complete a self-assessment return". Someone explain please?

monkeypuzzle47

it also goes onto say...HM Revenue and Customs will automatically collate the tax affairs of millions of Britons from employers, banks and investment firms into a single “digital” tax account which can be checked at any time online.
So what does this mean for us MIPS?

stevo5678

No details have really been released yet but I have to admit it's quite scary from an accountant with his own practice perspective as tax returns have been our bread and butter for years. It won't only affect business owners but also employees of said firms.

My feelings have moved from worry to uncertainty as the tax return is just the mechanism to report and calculate the amount of tax due. Tax will still be due as tax is tax! It will just be reported differently.

Think of all the software providers also affected!

This will be huge news in the profession (and in general) for a long time now. Lets see what happens when the dust settles...

monkeypuzzle47

Thanks stevo5678. I am also quite worried as tax returns make up 80% of my business. Yes lets wait and see what happens.

Neillaw

It reads like they want more frequent information from tax payers, does this mean that they want monthly monthly tax returns instead of yearly returns, is this going to make each month a January?

I think that we will have to wait and see what effect this has on the profession but I can't wait to see what they will be doing with the CIS scheme!

Diddy Mau

I'm not an MIP, but this looks odd
what do you class as straight forward tax affairs?

stevo5678

I'm guessing small businesses (maybe non VAT reg) and individuals with property income and just employment etc.

monkeypuzzle47

Goodness me. My business is doomed

stevo5678

Thing is, self-employed people still need to do some form of accounts to work out their profits so that can't change greatly so it has to just be the way it's reported. The accounts will still need to adhere to the current tax legislation unless they overhaul that as well!

Also books will still need to be kept.

Technically many taxpayers can do their own returns already but choose to use an accountant, I'm hoping that won't change.

monkeypuzzle47

http://www.bbc.co.uk/news/business-31937637
Accounts will be like real time accounts!

MarieNoelle

This is the link on the HMRC website if you are interested.

Pete12

It enables A LIABILITY to be determined, in the knowledge it is unlikely to be correct in every case. Any corrections will remain the responsibility of the individual/business but the default position is almost certain to disadvantage the latter because the missing factor in this scenario is allowable expenses.

With the inexorable "push" towards a cashless society and automatic access to individuals'/businesses' bank accounts it only requires a few more "dots" to be joined before individuals/businesses effectively lose all control.

This has huge implications for both the profession and civil liberties.

stevo5678

http://accainpractice.newsweaver.co.uk/24o3dijxzz441j2fzx3z51?email=true&a=1&p=48547416&t=28218202

Rozzi Rainbow

Parts of this sound good to us - no need to tell HMRC things they already know. So it saves having to chase them for P60 info (when the client has lost theirs) just to put on the tax return to send back to them. And it would save the hassle of completing returns for clients who don't really need them but have received a demand to do so.

As far as self employed people and those with rental income go (who make up the bulk of our tax returns) this income will still need declaring to HMRC, so we will still need to prepare and submit accounts information. But it looks like HMRC don't want us getting the whole picture - it seems like HMRC (rather than us) will calculate the tax due. Hmmm.

I wonder when the deadlines for submitting accounts will be. Currently those with an April year end have a year and nine months to submit their accounts info - I can see this being reduced. In theory manic January should improve, but what if it just becomes manic September (say) instead?? I read on the HMRC website that business' accounts software will feed into the new digital tax account - do HMRC really think small business complete accounts information on a monthly basis???

monkeypuzzle47

My guess is that they will bring in a plan for small non vat registered business that they can opt into like the vat fixed rate system. So no accounts need to be filed and no expenses declared. They just pay percentage of tax based on income. Hope i'm wrong.

burg

At the moment I am sitting fairly comfortable as an MIP. The way I see it the most simple of tax returns will no longer be required. Great! That stops all those directors tax returns. It seems from reading the initial document that the idea will be that bookkeeping software will be able to report monthly. So it's going to change the role of MIP's somewhat into a type of management accountant.

My concerns at the moment are how it will work for the not so simple businesses i.e. those who really are on an accruals basis with many year end adjustments such as stock, WIP, accruals, prepayments? Will this all need to be done monthly? In which case a lot of extra work and fees to be charged for little gain for a client.

With the potential of calculating tax liabilities monthly how will this work on the above (if the adjustments are not made until year end) and also on seasonal businesses? Are they going to be paying for part of the year and claiming refunds for the other part?

There's a long time between now and when it really comes into force properly and there is a lot for HMRC to work out. I would just carry on as we are at the moment and consider it more closely as and when they actually work out the finer details of how it may work.

stevo5678

monkeypuzzle47 said:

My guess is that they will bring in a plan for small non vat registered business that they can opt into like the vat fixed rate system. So no accounts need to be filed and no expenses declared. They just pay percentage of tax based on income. Hope i'm wrong.

That's scary as it will reduce our work!

burg

stevo5678 said:

monkeypuzzle47 said:

My guess is that they will bring in a plan for small non vat registered business that they can opt into like the vat fixed rate system. So no accounts need to be filed and no expenses declared. They just pay percentage of tax based on income. Hope i'm wrong.

That's scary as it will reduce our work!

It's a possibility but I think that it is only a small one. It would mean classifying so many different businesses and it wouldn't be as simple as for FRS VAT. I believe they would still need to give the option to use actual expenses as they do in say calculating Foster Care Income and in choosing to use FRS rates. In which case our work would actually increase as we would need to consider both options as we do now for the new 'cash basis' rules for some sole traders.

Rozzi Rainbow

burg said:

With the potential of calculating tax liabilities monthly how will this work on the above (if the adjustments are not made until year end) and also on seasonal businesses? Are they going to be paying for part of the year and claiming refunds for the other part?

This is interesting because it does sound as tho they're trying to reduce the time allowed to pay SA tax - but they way they've worded it is as if they're doing the taxpayer a favour!!!

Rozzi Rainbow

stevo5678 said:

http://accainpractice.newsweaver.co.uk/24o3dijxzz441j2fzx3z51?email=true&a=1&p=48547416&t=28218202

Thanks for posting this - as I'm also an ACCA member I've given them feedback on behalf of the practice I work in. They've not given us long - I see they wanted us to respond by the end of today. I'd seen they'd sent the email last night but wouldn't have looked at it till tonight if you hadn't posted that.

I wonder if the AAT will do a similar request for feedback??

stevo5678

I’ve just watched a SWAT UK post budget key points webinar and the lady lecturing is very relaxed about the whole thing. She said it is a ‘procedural’ change. I think that sums it up nicely…

Londina

also I keep hearing on the radio advert such as "Submit your own tax return online" so more and more people just do that, instead of paying an accountant!

What about those "silence" company directors, whose who haven't been paid or do anything on the company, they can just submit their NIL return online (or do they require a demand first from HMRC) ?

burg

Company Directors needing to file a Tax Return is only a HMRC requirement with no Tax Law backing it up. If the director has no reason to file a tax return i.e. no untaxed income or not a higher rate tax payer with dividends etc then HMRC need to request the director file a tax return. Note when the dividend rules change on 6th April this will change as dividends will no longer be taxed at source so most director/shareholders will have to file a tax return.

As for the death of the tax return. Not affecting me in the slightest. Business is busier than ever and we are getting more enquiries than ever before. My personal thoughts are it won't change who uses an accountant just what we do. I'm by no means panicking or even worried.

monkeypuzzle47

relative to this thread see link https://gov.uk/government/uploads/system/uploads/attachment_data/file/484668/making-tax-digital.pdf