The chancellor announced in his budget last week a move that would signal the end of the tax return. Digital accounts will take the place of the tax return for many tax payers, a move which in theory will simplify the tax process and end the traditional January surge on HMRC.
HMRC holds information about you. Money you earn from employment and amount of tax you have paid on it, benefits you’ve received from your employer, bank interest you’ve received and the tax you’ve paid on that and CIS deductions you have suffered if you work in the construction industry. This information will be pre filled in your digital accounts, you hit the green tick and your tax is complete.
You may have noticed that the information held by HMRC is hardly exhaustive. Dividends, capital gains, property income and self-employment income aren’t known and will have to be completed. Exactly as you would do with a tax return.
For anybody who has had the pleasure of dealing with HMRC over tax coding issues or PAYE disputes, you may be aware that the accuracy of their information can often be questionable. I have concerns that the pre filled information could be wrong, resulting in incorrect tax requests which could result in over (or under payments of tax).
Tax is taxing
This is a government effort in tax simplification. As their edgers state, tax doesn’t have to be taxing. This is a lovely slogan but simply doesn’t hold true. Anybody can deal with their own tax affairs, the government gateway gives full access to filing of your tax return, VAT returns and CIS returns. However, this doesn’t mean that doing so is easy. The complex tax system which we live in means that small mistakes can result in costly errors in which there are no reprisals from HMRC.
Just another tax return
If it looks like a duck and quacks like a duck, it’s probably a duck. If it looks like a tax return and acts like a tax return, it’s probably another tax return. The digital account may on the surface signal the end of the tax return, but to me it looks like a tax return, albeit in a slightly different format.