We all await the details of the proposed changes to self assessment outlined in the Budget.
Apparently, from as soon as April next year, individuals and small businesses will no longer be required to submit SA returns. Instead, these taxpayers will be set up with digital accounts, pre-populated with data HMRC have collected from employers, pension providers, banks and building societies…
Those practitioners reading this postings, who still remember the tax system prior to self assessment, will be dusting off their assessment checking skills.
What HMRC seem to be suggesting is that rather than collecting and filing information, taxpayers and their agents will be accessing and checking information.
There are a number of disturbing suggestions written into the notes published by HMRC on this issue. Perhaps the most disturbing is the suggestion that business accounting software will be linked to a taxpayer’s digital account. Any alarm bells ringing?
There are obvious differences between the proposed digital account and the pre-self assessment processes. There will be no “correspondence” and issue of Schedule D or Schedule E assessment (remember those?); practitioners or tax payers will simply download data from their PC and check the calculations in the digital account.
Does this mean the end of self assessment as we know it? Will tax software be redundant for the management of a client’s tax position? Certainly, some processes will be required to compute and download information that is not readily produced by accounting software, or previously submitted to HMRC by third parties. For example, income from letting property.
No doubt professional Institutes will be watching our backs and there should be opportunities to consult on the changes, but if HMRC meet their declaration, to transfer 15 million taxpayers to the new digital account process by April 2016, we will need to keep a careful eye open for information as it’s published.
Practitioners will also need to sell the value of “Checking and uploading data to clarify the correctness of your digital SA account for the year to …” instead of processing data through your software for onward filing with HMRC.
Times are a changing…