Imagine that you run a part-time consultancy business that brings in £11,000 profit, it’s your only earnings for 2015-16.
You happily access your portal login, that you have finally mastered, and in a few minutes your tax return is filed and there’s no tax to pay.
You are subsequently advised by HMRC, that from April 2018 you will need to upload quarterly figures to your digital account with HMRC, and what’s more, in a format that syncs with their systems. As far as you can make out this means subscribing to software that you don’t presently have and have no idea how to acquire, let alone use.
You ask an approachable accountant how much she would charge to do this for you and had to head for the nearest chair when you were advised it would be at least £1,500 a year.
If Making Tax Digital becomes a reality, and if HMRC do not change their intention to mandate that all self-employed businesses that have profits in excess of £10,000 be required to comply with its filing requirements, then this sort of overkill reporting will be commonplace.
The Treasury Committee considering these proposals do not agree with HMRC’s approach. Thankfully, they are taking heed of the numerous representations that are being made by “interested” parties. Their comments make a number of wide ranging recommendations, not the least of which is to remove the necessity for smaller businesses to make quarterly uploads until their activity levels exceed the current VAT registration limit, and perhaps at even higher than this.
They endorse a trial run, and make this voluntary (any volunteers?) and applicable to the larger concerns that can afford to take on the software and professional support costs.
Surely, it cannot make sense that non-taxpayers are required to take on additional costs just to inform HMRC that they will not be liable to pay tax? We await HMRC’s response to this consultation. Fingers crossed…