In the latest edition of our Talking Tax we look at:

  • Don't believe everything you are told!
  • Further tightening of entrepreneurs' relief rules
  • A summery Budget for some
  • Child's play
  • Employment intermediaries - reporting requirement
  • Share and share alike
  • A day out at the races, on us

Welcome

2015 is set to be a busy year for tax changes with two Budgets already and the Autumn Statement expected in a few months' time.

In this autumn edition we take a look at the key announcements from the Summer Budget, examine in detail a couple of announcements from the March Budget and contemplate a few recent experiences which may have caught the unwary out.

Digital future

With the Conservatives taking a majority government in the 2015 election, it appears that they may now have to carry out their promise of scrapping the tax return, as we know it, and move to digital accounts.

This was a surprise announcement in the March Budget with a glossy document published explaining (or not as the case may be) how they intend to digitalise tax returns by 2020 for all.

Some cynics may think that this was a last ditch attempt to curry favour with the voting public by suggesting that tax would all of a sudden become a simple exercise, where HMRC do all of the hard work. However, in reality, this is very unlikely to be the true picture.

What we know so far

In short, very little! HMRC are likely to publish further information later in the year but for now we just have the short glossy to peruse. We have pulled out some of the statements included within that document and provided our thoughts on what this could mean (see table on page 2).

What remains to be seen?

A lot! There are still a number of questions to be answered as to how the new digital accounts will operate in practice and a lot more information is needed. Some of the key questions we are yet to have answers to include:

  •  How frequently will information need to be uploaded/checked/confirmed on the digital accounts?
  •  Will there be penalties if taxpayers approve data which HMRC have inputted in error?
  •  Will there still be a deadline date?
  •  How will HMRC be able to provide confidence that errors on their side will be minimised?

The last point is of particular interest as, unfortunately, it is not only on a rare occasion where HMRC make an error or pick up the wrong bit of information (see our following article for some examples). Therefore, placing more confidence in the databases HMRC have access to and using this information to calculate an individual's tax liability may well leave many taxpayers shaking in their boots!

The upsides

Recent statistics show that 16% of those filing tax returns for 2013/14 had no tax to pay (i.e. filed nil tax returns) with a further 8% owing £50 or less. This equates to nearly a quarter of the 11 million people now filing tax returns owing very little, or nothing, in tax.

A shift to digital tax accounts may benefit many of those individuals with simple tax affairs as, rather than form filling, they will just be required to verify HMRC's data. We do wonder though, if HMRC have got the information wrong, will the taxpayer be penalised?

Also, having sight of all the different tax liabilities in one place rather than having to login to several different portals should make life a bit easier. A number of other upsides have been promised but only time will tell as to whether these will be achieved in reality. In the meantime, we wait with bated breath, albeit as you might have gathered a little bit sceptically, to see more details on how this big change is going to be achieved!

Download Talking Tax - Autumn 2015

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.