Tax & admin · 28 January 2016

Experts deride government advice to submit tax returns via telephone

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Firms that cannot submit online tax returns could be able to do it over the phone

The government’s announcement that small business owners will not necessarily have to submit tax returns online, and will instead be able to file information over the telephone, has been met with derision by small business stakeholders that claim the method will be unworkable.

Following comments made by the Treasury’s financial secretary, David Gauke, that firms which cannot “go digital” can report to HMRC via telephone, commentators have indicated that such a process will be unattractive to small business owners, many of whom find it difficult to interpret complicated government terminology.

Partner at law firm ReeceRussell, Jonathan Russell, said: “As an advisor, one of the biggest fears small business owners have of doing things over the telephone is that, as with some HMRC forms, there may be seemingly innocuous questions that could open the business up to greater scrutiny.

“It has to be remembered that HMRC terminology does not necessarily have the same interpretation that is in common usage,” added Russell, suggesting that a telephone helpline would be needed to explain to business owners exactly what is suspected of them from HMRC.

Concerns have been expressed that HMRC’s systems would certainly crash if anything other than a small minority of taxpayers were to submit their tax returns by telephone. For head of tax at law firm Fiander Tovell, Andrew Jackson, this would not be the best way to resolve the issues posed by the governments proposed move to online tax submission.

“Proposals are predicated on the assumption that all businesses keep electronic records, and so all that is needed is to extract a couple of totals from those records and you can get an idea of the taxable profits,” said Jackson. “This is not the case for a large number of small businesses who rely on accountants to do that data entry.”

According to HMRC, two of every five self-employed workers are either unable to use the internet or is in need of help using online government services. Requiring these individuals and small business owners to have details of all payment transactions available for upload could result in significant costs and may be unduly onerous for HMRC to process.

“HMRC could make no good use of the information, unless it is going to prepare an estimated tax return for every taxpayer, which would be a huge and pointless drain on resources.

“Despite having set the threshold for reporting at £10,000, HMRC has failed to appreciate that it is not normal for a business to have an accounting department with a sophisticated accounts system, updated in real time,” Jackson went on to say.

Whilst most taxpayers find time to submit their returns before the government’s imminent deadline, some struggle to meet it. Business Advice has compiled the funniest excuses HMRC has received from previous late payers.

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ABOUT THE EXPERT

Fred Heritage was previously deputy editor at Business Advice. He has a BA in politics and international relations from the University of Kent and an MA in international conflict from Kings College London.

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