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Death of the tax return: what this means for accountants

23 March 2015 Candidate Blogs

Real time online accounting may not be the sweetie of choice for small businesses but overall for accountants its good news.

Under the plans for online self-assessment and payment accountants are likely to be busier than ever.

Although the detail has yet to be worked out, effectively people who work for themselves and small business owners are likely to be filing income returns and paying their income tax throughout the year. This will inevitably mean more work for accountants as they keep their clients’ compliant.

The chancellor’s announcement was wrapped in candy floss yet for many this may not be the sweetie of choice. Submitting accounts via desktop, smartphone or tablet may seem highly edible but sceptics doubt that dates will be random or that there will be a choice over when tax should be paid.

The upside of course is that instalments can be spread throughout the year, easing the burden of the year end lump sum but small businesses will need to keep their books balanced real time too and this may take up more accountant time adding to costs for the small business owner.

Of course the real treat will be consumed by the Chancellor of the Exchequer who will get tax money into the coffers much earlier. Tax collections could feasibly be as prompt as PAYE, but this class of taxpayer does not have the administration to do themselves.

In digesting the news there’s been a mixed reaction which has fuelled discussions around HMRC’s track record of large scale IT projects, which real time online assessment will need; historical performance on over-runs and over budget projects, HMRC’s ability to gear up for year round support, particularly when all incomes will need to be declared in a timely way; the sceptics are out front viewing the introduction as overly ambitious.

The current online assessment has not been without its faults. Certain types of income still need to be filed in hard copy or use companies that have invested in expensive software to submit the return. In theory the concept should make tax reporting simpler but at the moment the devil is in the detail and this may not be the ribbon wrapped chocolate box that the chancellor promises to tax payers.

Is this good news for accountants? Yes of course. They will be in more demand as the small business accountant will need to be retained throughout the year. And for the economy? Having tax collected earlier is always good for the treasury. Less wiggle room for tax avoidance? Probably as most accountants are keen to see these gaps closed with the damned if you do and damned if you don’t approach of the past few years.

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