HMRC announces digital tax return U-turn ahead of debate

HM Revenue and Customs (HMRC) has confirmed that small businesses will still be able to file their tax returns via telephone after the tax authority found that 40 per cent of self-employed workers struggle to use HMRC’s digital self-assessment tools.

Plans to implement a regime where taxpayers must submit quarterly tax returns, as featured in the ‘Making Tax Digital’ document, will still go ahead but self-employed workers, landlords and small business owners will have the option of filing their tax return online or by telephone.

HMRC’s own figures found that two-in-five self-employed workers are either unable to use the internet or require significant assistance to use government services online.

As a result, the Treasury is now seeking to water down the digital proposals ahead of a debate in Parliament later today after more than 100,000 people signed a petition calling on the Government to shelve plans for quarterly self-assessment tax returns.

David Gauke, Financial Secretary to the Treasury, confirms that those really unable to “go digital” will not have to and can file their tax affairs over the phone.

Those registering their self-assessment account over the telephone will be required to answer a series of questions about their tax affairs – from revenues to costs – over the phone.

The exact details that will need to be passed on to the tax authority are not yet known, but there are concerns that HMRC is unable to deliver a system that will enable small business owners to supply such information every quarter over the phone; especially after it emerged HMRC failed to answer 18 million phone calls in one year.

Mr Gauke wrote in the Daily Mail today: “Going digital will not be an option for some people.

“Businesspeople who genuinely can’t use digital tools – perhaps because they can’t access broadband, or don’t own a computer or smartphone – will be offered alternatives, like nominating someone else to update their information for them, or giving information by phone.

“So there’s nothing for businesses to fear in this new system.”

By 2020 all self-employed professionals and SMEs will have an online tax profile akin to an online bank account. Treasury sources claim ‘common sense will prevail’ to ensure the changeover is not ‘burdensome’ for taxpayers.

Date published 25 Jan 2016 | Last updated 25 Jan 2016