Landlords will need Digital Tax Account
Monday 30 May 2016
Government plans to transform the tax system before 2020 by introducing ‘digital tax accounts’ which are intended to make life easier for landlords.
From April 2018 annual tax returns will be scrapped in favour of quarterly updates in which landlords must summarise their rental income and expenditure using special free software.
Last year’s March budget saw Chancellor George Osborne promise: “Millions of individuals will have the information the Revenue needs automatically uploaded into new digital tax accounts.”
However, critics question whether the software is capable of handling more complicated tax returns and wonder if a three-monthly payment system is just a new way to accelerate the flow of revenue into HMRC’s coffers
They fear the new regime will quadruple administrative and accountancy costs and doubt whether the Chancellor’s timetable – to give more than 50 million individuals and businesses their own ‘secure, personalised digital tax account by the end of the decade - is realistic.
At the moment there is no guarantee these moves will not be subject to the U-turns which seem to characterise much recent Government legislation.
400% increase in tax reporting
And given a less-then enviable track record of IT implementation, many people are asking whether the software will be in place to deal with a 400 % increase in tax reporting.
Others will ask why an already onerous annual chore should be replicated, and a petition with 110,000 signatories calling for the Government to shelve the plans triggered a Commons debate in January.
The Government denies the new system will mean submitting four tax returns and says the ‘quarterly updates’ will “largely be a matter of checking data generated from record keeping software... and clicking ‘send’.”
It says the updates will be generated from ‘existing digital business records’ and ‘in most cases’ will involve ‘little of no further entry of information’.
The Government says the process ‘will be much quicker to complete than the current tax return’.
Which may well be the case - but it will still need to be completed four times a year.
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