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The 2015 Budget: Last one out, please turn off the lights…

written by Editor, 20 March 2015

Blog by Mark Purdue, Senior Product Owner – Digita Tax Software
Budget

On Wednesday, the Chancellor gave his last Budget before the General Election in May. Whilst perhaps a little light on real content, the key headline for those in the accountancy profession was the scrapping of the tax return.

What does this mean to the practitioners? Is the profession as we know it, for tax compliance at least, dead?

I’ve read a lot of comments on forums from those who believe that it’s the beginning of the end. Others comment that they only see opportunities.

But before we all dust off our CV’s and pack our bags, let’s take a look at the detail.

Firstly, there’s very little detail – a consultation process will commence later in the year, when the government will also publish their roadmap of proposed changes.

Budget

Secondly, this really shouldn’t be a surprise to anyone in the profession. I’ve written previously about HMRC’s plans to digitize Self Assessment, and this recent announcement is merely releasing that information into the wider public domain. This has been on the horizon for a number of years.

So in these proposals, is there a benefit to the profession? In a nutshell, yes.

Those predominantly dealing with compliance only receive historic information. That new employment/promotion that made a client higher rate, the sale of property at a large gain when the client had unrealised losses, the pointless child benefit claim that was all subsequently repaid via SA – these are events that the agent finds out about when it is too late to rectify. With this proposal, you will be notified on such events and be able to give near real-time planning to avoid or rectify mistakes. You’ll have an active role in managing your clients.

But are you going to have any clients left, being as this online account is so straight-forward? Again, yes. There may be the odd casualty along the way, but a client who doesn’t understand tax today, still isn’t going to. Those too ‘time poor’, will still be too time poor… not to mention the majority of clients who just don’t ‘fit’ into a simplified online world (partnership income, most traders, loss claims, gift aid, CGT, foreign, non-residents), and those wanting or requiring simple management and advice will not get it anywhere else.

But the possibilities don’t end there. Now we’re on the realm of ‘Big Data’ we can collate and use it for good. Currently you may write to all clients to remind them about their ISA subscription. In the future, you’ll be able to see which client have not made their subscription (as at a few seconds ago) and give targeted bespoke advice to just those clients. Just one example of how you could add value.

Certainly, the landscape is changing, but we’re not done yet. Remember the naysayers believed that the introduction of Self Assessment would kill the profession, and we’re all still here.

Do you have any thoughts or questions on how the Budget changes will affect the accountancy profession and tax compliance work? Please comment below.


5 comments:

  1. 23-03-2015

    David Mitchell commented:

    Auto completing sections of the tax return where information has already been subitted to HMRC from third parties must make perfect sense. Why duplicate work. Sweden has been auto-populating tax returns for years. It just shifts the onus of the final check from HMRC to tax advisers. I certainly don’t believe I am in a position to book the January skiing holiday just yet.

  2. 22-03-2015

    Stanley Kenner commented:

    I hope that HMRC are not going to introduce a monthly update regime for inputting self-employed accounts. This could be, like RTI with monthly penalties for late submissions.

  3. 20-03-2015

    John Huggins commented:

    Thoughts on the death of the Tax Return

    1. The first volte face was to admit that the first bell sounds for the paper Return, this should not concern those accountants and agents who went electronic many years ago; the concern is for those who are not computer literate or do not have a computer. A complex tax Return these days can be for a pensioner with several differing sources of income and several different pensions..

    2. HMRC have not ended the agents system and as long as there are clients who would prefer to get on with their business than their tax there will still be work left to do…

    3. There will be a five year transition in which there will be many errors and HMRC probably realising that online and data collection through their portal as opposed the the Tax agent’s cannot be perfected in such a short space of time,; furthermore forcing an e-based Tax return system will increase the workload for those who already have their systems in place .. that is us.

    4. So in the words on the inside of the front cover of the Hitchhiker’s Guide to the Galaxy “Don’t Panic” or to put it in another way..
    a. Breathe in
    b. Breathe out
    c. Repeat

    5. Enjoy the weekend, it’s Springtime and DIY and Self-Assessment beckons for another year

  4. 20-03-2015

    Kevin Preston commented:

    I have raised the issue with your development team about storing client’s Govt Gateway login credentials. My worry is that agents will not have adequate access and will be hampered because we will are unlikely to be permitted to make a declaration to HMRC on a client’s behalf without the client’s signature.

  5. 20-03-2015

    Stuart Jones commented:

    My biggest concern is, that as HMRC do less and less and make more and more errors, accountants will be left to do the work. Clients will not pay for it so we’ll end up picking up the cost of this idea.

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