Tax really should be simple!

I have to admit I’m not a great believer in the Office of Tax Simplification because, frankly, they don’t actually seem to achieve anything tangible. Throughout the fiasco that has been the MTD initiative they have remained silent – and what a fiasco it has been!

From the outset, dates were set in stone and we all had to be ready to file even if we had a turnover as low as £10k and, of course, spreadsheets were never going to work. But what actually happened? Well, so far only MTD4VAT has actually launched, and we are returning nothing more or less than we were before its imposition. MTD for everything else has been kicked into the long grass until 2021. The use of spreadsheets – far from being outlawed  – has been actively encouraged, much to the chagrin of the software industry, and we are now sinking under a deluge of bridging software applications. MTD4VAT has already been hailed as a success by HMRC as they try to justify ever-increasing budget allocations and I’m really looking forward to the significant reduction in the supposed tax gap contribution for errors, as expected with the imposition of MTD4VAT.

The latest report from the OTS, on tax reporting and payments for the self-employed and residential landlords, is an abject lesson in stating the raging obvious; so obvious it didn’t or shouldn’t have needed saying, especially at this late stage in the MTD agenda. The guts of the report states that it would be a good thing if a taxpayer could go to one place and see exactly where he or she stands as regards their tax. They call this, not surprisingly, an ‘Individual Tax Account’ (you couldn’t make this up) which would, guess what? Yes, combine the existing Personal Tax Account AND the Business Tax Account, so everything is all under one roof as it were. Genius or the raging obvious? You decide.

Having a single place to go where a taxpayer can see what their tax situation is, where they can upload information if they want to, where they can see what information has been uploaded by third parties and guess what? They can also make payments towards their tax; this must be the way forward.

Let’s be honest, this should have been instigated from the outset; this should be in situ NOW. Every accountant would have asked for this on day one.

As regards making payments against the tax liability, this account will produce a calculation that is dependent on when information is uploaded, and will be as good or bad as the quality and timing of the data entered. But, irrespective of the calculation, a taxpayer should have the ability to simply make payments against their possible liability at any time and for any amount, which should all be logged and easily viewed. And yes, they should be able to draw down money that they have already put in should they wish to.

Taxpayers should not have to use any form of tax calculation contained within the account, nor should there be any mandation for more payments than the already legislated-for payments – we know that mandation does not work.

The Individual Tax Account is what we should have had from day one.

Now there are two very interesting facts that are contained within the latest OTS report, which will interest all accountants in practice:

• There are 4.96 million self-employed people in the UK, but 46% of them don’t have an accountant (based on HMRC data from SA tax returns filed).

• There are 1.5 million residential landlords and a third of them don’t have an accountant.

To me this means we have to look at our marketing, our pricing structure and our use of cost-saving tech to get these taxpayers to onboard. This simple piece of information shows that new clients are out there, and boy do they need us.

• Tony Margaritelli Chair, ICPA

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