In last week's Budget the chancellor announced that small businesses and ten million individuals will no longer need to file tax returns.
This will rely on:
the successful and secure rollout of digital accounts for taxpayers
the correct information being in these accounts
all information being complete
businesses keeping their records up-to-date and these records being accurate, with distinctions between areas like capital and revenue being clear.
The digitalisation aspect of the proposal – linking business accounting software to a digital account by 2020 – is ambitious and there is no clear proposal as to how this will be achieved.
In the document Making tax easier; the end of the tax return the government states ‘their accounting software will be able to feed data straight into their digital tax account, so most businesses will simply log-in to check their details with no need to send an annual return.’
We are concerned at the potential tax loss to the exchequer, the risk of continual defaulters and also the fact that businesses and individuals may end up paying more tax than is due.