Making tax digital - quarterly reporting

The announcement in the Blue book about proposals for mandatory quarterly reporting of accounts information by businesses and landlords was a big surprise to me. I knew quite a bit about HMRC's digital agenda and developments, but the idea that it would be mandatory is not something I had heard before the autumn statement.

I am worried about the impact on smaller businesses and the additional costs they will have to bear, but also the fact that many of my clients will have no hope whatsoever of complying, and for some it won't be worth me trying to educate them.

I thought I would ask members' views, and have the following questions for you. It would really help me to understand this issue better if members could take 5 minutes to give their views.

1.  Do you think your clients want to report quarterly to HMRC - it will after all give them much more control over their tax liabilities which will be calculated quarterly?

2.  What proportion of your clients are sufficiently IT aware to make this possible in the short term (the next year or so)? I appreciate that this is quicker than the proposals indicate, but it tells me the current state of IT literacy in your client base.

3.  Do you regard this as an extra burden in terms of time and administrative costs for small businesses?

4. Have you considered, or are you now considering introducing bank feed software for clients to use, and if so do you think your clients are suitable candidates for it? To be suitable they would need to make most of their payments by online banking, as cheques and cash cannot be auto analysed. Accepting cash is OK provided it is banked intact on a regular basis.

5. Have you any other comments?

See Making tax digital for links to HMRC’s proposals issued on 14 December 2015. We are interested to hear your views on the proposals and timings so please add a comment below

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  • 1. No, nobody wants to spend more time reporting to HMRC. People feel they do too much of that already. (How does it give them more control over their tax liability? Tax is not calculated on quarterly profit; it is calculated on annual taxable income.)
    2. Very few. Maybe they have cash accounting and invoicing in near real-time, but that is not the same as accurate accrual accounting.
    3. Yes. Extra time and resources for no benefit to the taxpayer.
    4. Yes, if majority of transactions are not cash or cheques.
    5. I don't see the point of quarterly reporting. It does not tell HMRC how much tax is due, as the tax is calculated annually (not quarterly), and the accounting profit needs to be adjusted for capital allowances, disallowed expenditure, personal use adjustment etc. Unless a full quarterly tax return is prepared, the information sent to HMRC will be useless. And even then, it will only be appropriate if tax payments are required to be made quarterly.
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