Digital tax accounts fail to win approval

A plan to force contractors and other micro-businesses to file their tax data online “at least quarterly” has failed to receive the backing of an independent body that oversees HMRC.

The Administrative Burdens Advisory Board, comprised of bosses and their advisers, said compulsory e-record keeping and quarterly e-updates “is not an approach we can endorse.”  

The board's verdict follows its alert in February that, despite taking on feedback better, HMRC’s plan to mandate quarterly online reporting for one-man bands raised “serious concerns.”

It could not be done at a lesser cost to business and was ‘difficult to see how more frequent reporting [of tax data] can reduce the burden,’ the ABAB said, seemingly rebutting the government.

Now, its concerns about compulsion are “significant,” and its suspicion about the impact on costs and administration is no more – the online “quarterly updates will be more burdensome”.

It also has “reservations around the current capability of software being able to deliver HMRC’s vision,” perhaps in light of “various problems” of late with HMRC’s online forms.

The appetite of small businesses to use the software is then questioned by the ABAB while others, such as the Federation of Small Businesses, have this month voiced concern about the software's likely cost to users.

And a more general criticism that the advisory board has about the digital accounts is unlikely to make its future meetings – or relations - with HMRC any smoother.  

The ABAB report says: “We were surprised and disappointed when this was announced at Autumn Statement, particularly that given our close engagement and relationship with HMRC we were not informed of the intentions earlier.”

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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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