There was uproar when the government announced its making tax digital initiative, especially since it looked very much like self employed people would end upo having to fill in four tax returns a year, one every quarter. If you’ve ever had to complete a tax return you can understand people’s dismay. It has long been a challenge, something a lot of people dread filling in once a year, never mind four.
Luckily there’s some good news. The Government has responded to an online parliamentary petition against the Making Tax Digital initiative, which is set to transform HMRC into an all-singing, all-dancing digital tax service, and reassured us that we won’t actually have to spend mnost of our lives form-filling for the tax man.
More than 103,000 people signed the petition, which called for the scrapping of the unpopular plans to force the self employed to complete four tax returns a year. And that was enough to send the petition to the House of Commons for open debate.
What the government says
The government’s response has eased people’s fears about a four-times-a-year tax return. This is what they actually meant by four annual tax returns:
- Quarterly updates will mostly be a matter of “checking data generated from record keeping software or apps and clicking ‘send’.”
- The reforms won’t actually mean filling in 4 tax returns every year, but will simply mean updating software or an app, which will take less time and be much less of a burden compared to the current tax return form
- Most of the time, you won’t even have to add any extra information
How will the quarterly updates differ from the current tax return system?
- You will get access to free record keeping software and apps to connect securely to your Gov.uk digital tax account
- The updates will be generated automatically using existing digital business data
- The updates won’t come with the same punishment for inaccuracies and late filing – the new digital tax administration sanctions are still to be confirmed
- The updates will give you an ongoing snapshot of your tax position, so you’ll be able to predict your tax bill more easily and be less likely to get caught out when it arrives
Sensible digital measures
So, as it turns out, the proposals are not as onerous as they seemed. It’s a great relief for millions of self employed people and small busi8nes owners. But why did it take a petition to get the matter clarified? If the answers really are that simple, surely they could have been given earlier without all the fuss? Perhaps it’s because the announcements were made before the details had been hammered out. Either way it’s great to know for sure what’s going on.
Want the fine detail?
For the fine detail, here’s a link to HMRC’s Making Tax Digital .pdf: