Quarterly tax returns NOT proposed - apparantly !
Discussion
To following on from this thread:
http://www.pistonheads.com/gassing/topic.asp?h=0&a...
According to the Government's response to a petition to scrap Quarterly Tax Returns for the Self Employed the intention is NOT for quarterly tax returns per se .....
https://petition.parliament.uk/petitions/115895?re...
That's if you believe anything they say .....
http://www.pistonheads.com/gassing/topic.asp?h=0&a...
According to the Government's response to a petition to scrap Quarterly Tax Returns for the Self Employed the intention is NOT for quarterly tax returns per se .....
https://petition.parliament.uk/petitions/115895?re...
That's if you believe anything they say .....
Although it might not mean that fully fledged tax returns are required every three months, it still sounds like a total non-workable idea to me.
Do they REALLY expect that small business will be able to supply business profit figures on a three monthly basis that fully take into account accounting period end adjustments (such are required for stock, debtors, creditors, accruals, prepayments etc)four times a year. These adjustments are required in order to ensure that the profit or loss figure shown in the quarterly "accounts" has been arrived at using proper accounting standards and conventions (Generally Applied Accounting Principles - GAAP)) Many, many smaller businesses struggle to be able to do this annually - and, in many, many cases, rely completely on their external accountant to work these things out for them once a year.
It still doesn't address how annual business related tax relief claims (such as Capital Allowances and Loss Reliefs) are integrated on a three monthly "update" system.
And, having submitted what will no doubt be misleading profit/loss figures for three quarters I presume the last submission will need to "correct" and "fix" all the errors submitted over the previous three submissions.
Or, will HMRC be happy that traders submit gash numbers in their quarterly updates?
Do they REALLY expect that small business will be able to supply business profit figures on a three monthly basis that fully take into account accounting period end adjustments (such are required for stock, debtors, creditors, accruals, prepayments etc)four times a year. These adjustments are required in order to ensure that the profit or loss figure shown in the quarterly "accounts" has been arrived at using proper accounting standards and conventions (Generally Applied Accounting Principles - GAAP)) Many, many smaller businesses struggle to be able to do this annually - and, in many, many cases, rely completely on their external accountant to work these things out for them once a year.
It still doesn't address how annual business related tax relief claims (such as Capital Allowances and Loss Reliefs) are integrated on a three monthly "update" system.
And, having submitted what will no doubt be misleading profit/loss figures for three quarters I presume the last submission will need to "correct" and "fix" all the errors submitted over the previous three submissions.
Or, will HMRC be happy that traders submit gash numbers in their quarterly updates?
Hoofy said:
Indeed! It's not so much inputting the data but checking that it is all correct before clicking the submit button. I suspect only having to check 3 months' worth of data isn't going to take that much less time than checking 12 months' worth of data.
Even if it is "correct" (not likely) it is still not going to "right" for tax purposes.Under the UK tax rules, the profit or loss figure shown in the accounts is NOT the figure that is used when calculating what the TAXABLE profit actually is. Tax rules dictate that certain accounting entries have to be removed and/or replaced by HMRC equivalents.
The classic one is "Depreciation of Fixed Assets" which is not generally allowed as a tax deductible cost for tax purposes. Instead, HMRC's own "Capital Allowances claims are substituted instead. You have no choice in this matter. There are many areas of accounting where the acccounting treatment is not allowed for tax purposes and has to be ammended before submission.
Simply inputting bookkeeping transactions (however accurately) into software such as Sage and then relying on the profit figure generated to be the correct "taxable profit" is downright reckless.
What are they thinking?
Don't they know their own rules?
akirk said:
surely lots of businesses will simply submit 'guestimates' and then adjust at year end...
which will simply make everything pointless!
Not only pointless - but much more complicated and expensive - because they will have to pay their accountants to sort out the mess at the end of each tax year.which will simply make everything pointless!
No point in trying to second guess HMRC on this.
It seems to rely on the use of software that doesn't even exist yet.
HMRC (well Govt in general) doesn't have a good track record on designing and implementing new systems / software.
If past performance is anything to go by, this will die a death and then be filed in someone's "too difficult" pile.
Trouble is the bunterish lickspittles at HMRC will have spent the £1.3b by then ..........
It seems to rely on the use of software that doesn't even exist yet.
HMRC (well Govt in general) doesn't have a good track record on designing and implementing new systems / software.
If past performance is anything to go by, this will die a death and then be filed in someone's "too difficult" pile.
Trouble is the bunterish lickspittles at HMRC will have spent the £1.3b by then ..........
Interesting edition of " Moneybox Live" on Radio 4 this afternoon. A spokeswoman from HMRC set out very clearly why HMRC hasn't got one iota of a clue as to how businesses operate. The reaction from the panel was essentially one of 100% disbelief. Well worth a listen -
http://www.bbc.co.uk/programmes/b06ts7jq
http://www.bbc.co.uk/programmes/b06ts7jq
Eric Mc said:
Interesting edition of " Moneybox Live" on Radio 4 this afternoon. A spokeswoman from HMRC set out very clearly why HMRC hasn't got one iota of a clue as to how businesses operate.
The panel summed up the exact frustration you expressed earlier in this thread. Will be very interesting to see how this plays out...
simoid said:
The Moose said:
I presume the idea is to smooth the income over 4 quarters as opposed to once a year?!
Or also so government gets tax earlier...?It is part of the "data monster" that HMRC is fast becoming i.e. it wants financial and other details of the population to be in their possession in real time - all of the time. HMRC wants to know EXACTLY what everybody is up to.
But it wants to increase its abilities to know everything with no staff - so the population becomes its own tax collectors and assessors. This is a process that began 20 years ago with Self Assessment. It was always going to go this way.
It's more insidious and sinister than just collecting tax.
We're some of these fears not also shared to the introduction of RTI. I'm assuming that hmrc assumes that the software vendors will step in.
I actually prefer the idea of quarterly returns, provided that I don't get hung up in miles of paperwork.
My concern is that my acountant is not the best in communicating so i have no real idea of what she corrects on the system, to come up with the gulp figure a week before it's due...
In fact if it gets to the stage that it's computerised with minimal intervention once setup I'd settle for monthly.
Big change for accountancy, but I'd imagine it's also an opportunity to spread their income more evenly across the year.
I actually prefer the idea of quarterly returns, provided that I don't get hung up in miles of paperwork.
My concern is that my acountant is not the best in communicating so i have no real idea of what she corrects on the system, to come up with the gulp figure a week before it's due...
In fact if it gets to the stage that it's computerised with minimal intervention once setup I'd settle for monthly.
Big change for accountancy, but I'd imagine it's also an opportunity to spread their income more evenly across the year.
Yes, there were concerns about PAYE RTI. In the end, the change to RTI went amazingly well. HOWEVER, there is a world of difference between submitting salary details every payroll run and submitting accounting information. The problem is not only the submission of accounting data, but all the additional amendments, adjustments and claims that are part and parcel of annual trading tax computations but which are independent of the basic book-keeping and accounting function.
Merely submitting the most up to date trading figures from your computerised book-keeping/accounting system (if you have one, that is - a huge number of traders do not) will NOT provide HMRC with the legally required taxable profit or loss of a business. In order to do that, amendments to the trading profit/loss figure usually need to be made. They used to be carried out under what was termed "Schedule D" of the tax code. The term "Schedule D" was abolished about ten years ago - but the need to make the adjustments was not. These are generally beyond the capability of the trader who in most cases aren't even aware of this necessity. They are reliant on their accountants to do this work.
Also, under current tax regulations, these adjustments are annual only. There is no facility in the tax legislation to make quarterly capital allowance claims, or quarterly loss relief claims, or quarterly add-backs of disallowed business costs or disallowed private use adjustments.
If raw accounts data only is sent to HMRC every three months, it will not only be non-tax compliant, it will also be incorrect and grossly misleading. On that basis, what is HMRC going to do with this erroneous data? Is it going to assess the individual for the wrong tax and National Insurance liability every quarter?
Or is it going to ask the taxpayer to calculate their own tax liability incorrectly under a form of three monthly erroneous self assessment system?
There are so many questions that HMRC need to answer about this "system" before anybody who works in this area will in any way feel a little less concerned. So far, I have heard absolutely nothing to put my mind at ease.
Merely submitting the most up to date trading figures from your computerised book-keeping/accounting system (if you have one, that is - a huge number of traders do not) will NOT provide HMRC with the legally required taxable profit or loss of a business. In order to do that, amendments to the trading profit/loss figure usually need to be made. They used to be carried out under what was termed "Schedule D" of the tax code. The term "Schedule D" was abolished about ten years ago - but the need to make the adjustments was not. These are generally beyond the capability of the trader who in most cases aren't even aware of this necessity. They are reliant on their accountants to do this work.
Also, under current tax regulations, these adjustments are annual only. There is no facility in the tax legislation to make quarterly capital allowance claims, or quarterly loss relief claims, or quarterly add-backs of disallowed business costs or disallowed private use adjustments.
If raw accounts data only is sent to HMRC every three months, it will not only be non-tax compliant, it will also be incorrect and grossly misleading. On that basis, what is HMRC going to do with this erroneous data? Is it going to assess the individual for the wrong tax and National Insurance liability every quarter?
Or is it going to ask the taxpayer to calculate their own tax liability incorrectly under a form of three monthly erroneous self assessment system?
There are so many questions that HMRC need to answer about this "system" before anybody who works in this area will in any way feel a little less concerned. So far, I have heard absolutely nothing to put my mind at ease.
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