Online tax returns fail to win favour with contractors
The government’s plan to introduce a new self assessment income tax system which would require independent professionals to report their incomes every quarter has been met with some resistance from a number of different sectors.
Whilst some have endorsed their plan as one which will allow those who work for themselves to be taxed more accurately, a recent report from the Administrative Burdens Advisory Board has revealed that they will not be backing the plans.
The ABAB comprises a number of managers and advisers and is tasked with overseeing HM Revenue and Customs and has described their ‘serious concerns’ at the plans that the department has mooted recently. They have also said that rolling out a system of compulsory e-record keeping involving a requirement for quarterly updates is not something they can endorse.
The issue was first raised in February, when the board alerted HMRC to the fact that they were unsure of the feasibility of the plans, and although they have been praised for taking on feedback, the board still believe that the department’s plans will have a negative impact on one-man-bands.
The proposed system carries a significant administrative burden to businesses, the costs of which are unlikely to be reduced by any great degree, leaving the board with no choice but to disagree with the government’s stance on the matter.
Where they previously expressed concerns about the potential for the new measures to have a negative effect on businesses, they are now convinced that the requirement for quarterly updates will definitely impose an unjustifiable burden on those using it.
They have also questioned the viability of HMRC’s technical capacity to implement the changes, especially in light of recent problems with some of the department’s online forms. The ABAB also hinted at a rift between themselves and HMRC when they revealed that they had not been kept in the loop regarding the proposals and had learned about them at the Autumn Statement despite believing that they had a close relationship with the department until that point.
The Federation of Small Businesses has added their voice to those of dissent, expressing concern that the cost to users may not be proportionate to the benefits.
Contractors who want to understand their financial obligations can read our guide to contractor tax for details of how best to manage their money. We also have plenty of information on the advantages and disadvantages of a limited company as well as a range of contractors’ guides to help you understand what it means to work for yourself.
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