What is a tax return going to look like in 2020 ?
Answer ?…no one knows; not even HMRC I think.
In the March 2015 Budget the Chancellor (known as the “Treasurer” in most countries), raised the issue of the ‘end of the tax return’.
The future focus will be on ‘digital tax accounts’, which appear to be a digital portal into HMRC containing all relevant tax details for that individual or business e.g. all VAT, PAYE, Self Assessment information in one place. This will happen for most of the current Self Assessment population next year. But I think the time line is too tight.
The Chancellor said that by 2020, 50 million individuals and small businesses will have such an account. But, I say, unless people are compelled to look at these accounts then many will just ignore them. So will people be compelled ?.
HMRC also state that they will populate digital tax accounts with the information they hold. In my experience in Australia when they introduced this type of system, a lot of this information will be wrong.
A document that has been issued (9 page .pdf) says; ‘By 2020, most businesses, self-employed people and landlords will be required to keep track of their tax affairs digitally and update HMRC at least quarterly via their digital tax account. These businesses will be required to use digital tools, such as software or apps, to keep records of their income and expenditure.’
So quarterly accounts then !. And compulsory electronic record-keeping ?. Neither accountants nor taxpayers can meet such obligations.
‘The government is consulting on options to simplify the payment of taxes, including whether to align payment dates and bring them closer to the point when profits arise, so that businesses make a single regular payment that covers all of the tax that they owe.’
‘The government announced at Autumn Statement 2015 that Capital Gains Tax would be brought more closely into line with income tax — paid within 30 days of completion of any disposal of residential property. This requirement will be introduced from April 2019.’
So quarterly payments on account ?. But much of it will be based on estimated figures ?. It seems unworkable at this stage, I think.
There is a long way to go. As they say; “watch this space”.