Quarterly tax return plans criticised

HM Revenue & Customs (HMRC) has had its plans for a quarterly tax return for businesses slammed by critics, who say that mandatory updates would add a significant and unnecessary burden on small firms in terms of accounting records and costs.

The Administrative Burdens Advisory Board (ABAB), which examines HMRC’s potential impact on the UK’s small business community, said in its annual report that compulsory digital record-keeping and quarterly online updates is not an approach it can endorse.

The report adds that it is 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, according to the organisation.

A spokeswoman for the ABAB, said that she understands from HMRC that quarterly tax returns might not mean full tax returns, but more along the lines of “quarterly information” although it will not be clear exactly what that entails until HMRC consults on it.

The Association is also concerned that small businesses that are not ‘tech savvy’ might struggle with the new system because it believes that HMRC has underestimated the educational and logistical challenges of transferring the UK tax system online.

These concerns were echoed by the Federation of Small Businesses (FSB), which claims that it is smaller businesses that will be affected most by the quarterly tax updates. A spokesman for the FSB said that forcing small firms to pay for expensive digital accounting software so they must submit extra tax returns is not going to help anyone but will just add to the cost of doing business in the UK.