ABAB question quarterly tax return plans

The Administrative Burdens Advisory Board (ABAB) believes mandatory quarterly tax updates would add a significant, unnecessary burden on small businesses in terms of accounting records and costs.

The independent body that examines HM Revenue and Customs’ (HMRC) potential impact on the UK’s small business community published a report this week which questioned Chancellor, George Osborne’s plans for quarterly tax returns.

Within its annual report, the ABAB said: “Compulsory digital record-keeping and quarterly online updates is not an approach we can endorse.

“We are concerned that the proposals for quarterly updates will be more burdensome than they currently are with increased record-keeping and compliance costs. This will have a big impact on the smallest of businesses.”

Mike Cherry, national chairman, the Federation of Small Businesses (FSB), echoed the sentiment that the nation’s smaller businesses will be most affected by the quarterly tax updates.

“Forcing small firms to pay for expensive digital accounting software so they must submit extra tax returns is not going to help anyone,” said Cherry.

“It will simply add to the cost of doing business in the UK. When every independent body and expert is lining up to tell you to stop, slow down and think again, it might be time to take a breather and listen to their concerns.”

Teresa Graham, chair of the ABAB, said that she understands from HMRC that quarterly tax returns might not mean full tax returns, but rather more “quarterly information”.

“We need to know what this information is – HMRC are going to consult on that,” added Graham.

“The small businesses that are not tech savvy might struggle [with the new system] – I don’t want them to struggler four times over. We are asking HMRC how they are going to assist businesses in this transition [to the digital tax account system].”

The ABAB believes that, overall, HMRC has clearly underestimated the educational and logistical challenges of transferring the UK tax system online.

“We would also encourage HMRC to urgently obtain a greater understanding with regard to the population of small businesses that do not have the required digital capability to engage and/or currently operate their business utilising manual (or partly manual) procedures; and develop the associated support required to enable them to engage digitally,” the ABAB’s report concluded.

Date published 7 Apr 2016 | Last updated 7 Apr 2016