11th January 2016 Posted by - Alexander Accountancy
During his Autumn Statement speech the Chancellor promised an injection of £1.3bn to deliver “the most digitally advanced tax administration in the world” by 2020.
The new digital tax accounts (DTAs) will require most self-employed people, businesses and landlords to keep track of their tax affairs digitally and update HMRC “at least” quarterly. “This will give individuals and businesses a more convenient real-time view of their tax affairs, providing them with greater certainty about the tax they owe,” said Osborne in his speech.
If that wasn’t bad enough, the government stated it will consult on “whether to align payment dates and bring them closer to the point when profits arise, so that taxpayers make a single regular payment that covers all their tax affairs”.
The Chancellor did not offer much tangible detail on the digital tax account although thoughts are that the ambition is to have 10m DTAs live by next year. This is quite ambitious given that UK’s working population is just over 30m.
The investment in HMRC’s digital strategy runs somewhat counter to an 18% cutback in departmental spending and other economies. The digital tax strategy is very expensive. It probably forms a large part of why the closures are happening – they need cost savings. They’re looking to save £100m by 2025 with these office closures. It just shows how cost inefficient HMRC been and they seem to be playing catch up in many respects.
The DTA measure will not apply to employees, or pensioners, with a secondary income source from self-employment or property and whose gross income from this secondary source is under £10,000 per year.
The measure will be implemented for income tax and NICs from April 2018, VAT from April 2019 and corporation tax from April 2020. The roll out will be staggered and there will be testing before the reporting becomes mandatory.
This is a key area that we as a practice are keeping an eye on as HMRC look to go fully digital. We will keep you up to date as more information on the practicalities appears. To view their progress visit the HMRC Digital Blog
If you’re concerned about this or have any other tax related issues, please email me at the following address. da***@al*******************.uk or Call Burton on Trent (01283) 743851
