In this month’s Budget announcement, Chancellor George Osborne publicised plans to digitise paper tax returns for the majority of the UK population by 2020. The plans have however already ran in to issues – IT concerns, security threats and software glitches have already posed serious questions.
Under the new plan, 15 million contractors and other self-assessors will be able to manage their own tax accounts online by 2016, with small business owners being introduced by 2020. The Chancellor has said time spent completing tax returns will be cut by 75% with the introduction of the new system. Experts, including accounting giants PwC, have called the time scale ‘highly ambitious’. Ian McCluskey, tax director at PwC has said:
“Even if this was a private sector IT project, one year from now to implement it is a very tough goal.” He added, “This is a digital transformation of a very significant scale for HMRC, employers, banks and other stakeholders.”
So how will it work?
The idea of the plan is to have an option to link an individual’s bank account to a tax account, elimitinating the need for end of year turmoil. The service will work via a website that can be accessed via PC, tablet or mobile. Contractors, freelancers and other self-employed professionals will be able to access this site at any point during the year, avoiding the annual last minute rush.
The programme will also aid transparency by breaking down how each user’s tax is calculated. The service will also update as the most recent information from pension data and employers is added to the system.
These ambitious plans have already fallen behind, less than a month in to development. Government IT projects rarely run on time, and this project is already proving to be no different. New systems will need to be built to facilitate these changes, contractor trade body, IPSE, have identified possible opportunities here, they have said:
“The UK has an army of highly skilled independent contractors who the Government can draw on to implement this project without delay. We would urge George Osborne to carefully consider the delivery of these digital accounts, and ensure business groups are consulted.”
If you are a contractor or freelancer and have any questions in regards to how these changes will affect you please do not hesitate to contact us here at Gorilla Accounting on 01204 357 105.
Are you thinking of changing your accountant in line with the new tax year? If so, get in touch today and one of specialist contractor accountants will be more than happy to advise you of our service offering and answer any queries you may have.