Tax returns could soon be a thing of the past as HMRC reveals plans to overhaul nightmare system
HMRC has actually exposed strategies to modernise its difficult tax returns system by changing it with a “electronic paper” that taxpayers could upgrade on a quarterly basis.
The overhaul, which will certainly work in 2020, will certainly permit employees to send their numbers online throughout the year, in a proposal to ditch the extensive paper variation.
The body says the move will help crack down on late penalty fees, and minuscule errors costing employees as much as £8 billion a year.
In a statement, the government’s tax arm acknowledged that at present, too many people “find the system hard” and vowed to make life simpler for Britain’s workers.
The current paper document is to be replaced with a digital version that can be updated quarterly, instead of annually.
This means that most businesses, landlords and the self-employed will record and pay all their taxes online.
Under the government’s proposals, the Making Tax Digital project will save the taxman £8 billion a year, it said, because taxpayers will be getting their tax bills right first time.
At present, those who file late or make errors on their submission are typically subject to a fine, which starts at £100.
In line with the new system, charities will no longer have to submit their returns, HMRC said.
When will the changes take effect?
HMRC is aiming to have the new scheme in place by 2020.
It will pilot digital systems with hundreds of thousands of businesses before rolling them out across the board, to ensure the software is user friendly, and to give businesses and landlords time to prepare and adapt.
It added that taxpayers would have 12-months to get used to the new system before any late submission fines would be applied.
Jim Harra of HMRC said: “We know that the majority of businesses want to get their tax right first time, but the latest tax gap figures show that too many find this hard, with more than £8 billion a year lost in tax as a result of avoidable taxpayer error by small businesses.
“Making Tax Digital will help businesses to get their tax right first time; it will help reduce the likelihood of errors, lower the chance of unwelcome compliance checks and give them greater certainty that they are getting things right.
“The appetite for digital services is growing and traditional paper-based processes make no sense in the 21st century where the vast majority use digital services.”
The current system
More than 10 million tax returns are submitted to HM Revenue and Customs (HMRC) each year, but 19% of those who have filled a self-assessment in the past two years think they may have lost out financially because they had made an error or not understood the document.
Making a mistake on your tax return could end up costing money; whether it’s an additional tax bill or a penalty for a miscalculation, HMRC’s system of penalties could be as much as 70% of the tax owed.
The deadline for sending 2015-16 self-assessment tax returns online to HM Revenue and Customs (HMRC) has now passed. The final date was 11:59pm January 31.
Those who miss the deadline could be subject to a minimum £100 fine, even if there is no tax to pay. This can rise to as much as £1,600 if there are further delays.
If you’ve made a mistake, the best thing to do is to get in touch with HMRC and explain you’ve made a genuine error.
It says it will treat those with genuine excuses for late returns leniently and focus its penalties on those who persistently fail to complete their tax returns and deliberate tax-evaders. These are the numbers to call if you’ve made a mistake .
An HMRC spokesman said: “Taxpayers can amend their returns within 12 months of the original deadline. There is lots of help available online. Anyone who needs help should get in touch with us.”
If you believe you may have made a mistake on your tax return, you can follow these steps to correct your submission and avoid a penalty fine .
Do I need to submit a tax return?
If you meet any of the following criteria, you are advised to get in touch with HMRC to submit your form.
- You’re an employee or pensioner with an annual income of £100,000 or more.
- You have a pre-tax investment income of £10,000 or more.
- You are self-employed, a business partner, or director of a limited company.
- You’re a trustee or representative of someone who has died.
– source: mirror.co.uk