Latest news with #FionaFernie
Telegraph
19-06-2025
- Business
- Telegraph
Landlords and businesses to pay £480 to file tax returns in HMRC digital push
HM Revenue and Customs' (HMRC) 'pointless' digital drive will cost 900,000 self-employed workers £480, analysis shows. HMRC's 'Making Tax Digital' project means nearly a million landlords and freelancers will have to report their taxes quarterly, rather than every year, from April 2026. The project requires businesses and individuals to pay for third-party software to complete their tax returns, with the cheapest software on the market costing £150, according to tax advisory firm, Blick Rothenberg. HMRC also estimates that training and transitional costs for small businesses will add up to £330. This means self-employed workers will be hit with at least £480 of extra costs to comply with the rules. HMRC has said its digital drive will make it easier for businesses to keep on top of their tax affairs and allow them to see real-time data on the health of their finances. However, tax experts have said the initiative adds needless bureaucracy without reducing tax liability. Fiona Fernie, a partner at Blick Rothenberg, said the regime was 'pointless', as the Treasury will receive no additional tax take, despite taxpayers' reporting burden increasing. She added: 'The concept that taxpayers are hit with an obligation to file additional returns, but will not be provided with the means to do so unless they incur a cost feels unfair. 'This appears to fly in the face of the taxpayers' charter which specifically states: 'We'll provide services that are designed around what you need to do, and are accessible, easy and quick to use, minimising the cost to you.' For smaller businesses and sole traders with lower incomes, this could be a significant hit to their finances.' Ian Cook, chartered financial planner at Quilter Cheviot, said: 'I would question the merit of the initiative and why it's been put in place. It's an extra layer of bureaucracy with no tangible benefit on either side – not the exchequer nor the self-employed taxpayer. 'People who are self-employed tend to be self-sufficient and doing meaningful work – carpentry, building work, running their own business. More admin will take time out of their busy day which reduces earnings capacity.' The Institute of Chartered Accountants in England and Wales (ICAEW) has said the digital income tax self-assessment drive was 'burdensome and not justifiable'. In its letter to HMRC in 2023, the ICAEW wrote: 'Making Tax Digital's income tax self-assessment has become mired in controversy, the credibility of the project and the 'Making Tax Digital brand' has been severely, if not irretrievably, undermined.' Despite the criticism, Labour has decided to broaden the scope of the digital drive. In a technical document issued alongside the Spring Statement in March, the Government confirmed that the Making Tax Digital rules will start from April 2026 for sole traders and landlords with qualifying income over £50,000, and extend to those with incomes over £30,000 in April 2027. It will be further extended to sole traders and landlords with income over £20,000 from April 2028. It is estimated that this decision to reduce the threshold to £20,000 will result in 900,000 sole traders and landlords being brought into the net from this date. Making Tax Digital was originally announced in 2015, and was expected to be in place by 2020. The project is already in operation for VAT. Since April 2022, all VAT registered businesses have been required to keep digital records and file returns through the compatible software. In 2018, the National Audit Office (NAO) concluded that it expected the project to cost rather than to benefit business taxpayers. It reviewed the project again in 2023, and reported a series of problems, including unrealistic timescales to implement changes, and failing to demonstrate that the project represents value for money.
Daily Mail
13-06-2025
- Business
- Daily Mail
HMRC's Making Tax Digital project labelled 'pointless' by a major accountancy firm
Businesses and the self-employed will have a higher reporting burden, making HMRC's digital project 'pointless', a major accountancy firm has said. Blick Rothenberg said 'Making Tax Digital', which requires taxpayers to report quarterly rather than annually, would not lead to any additional revenue for HMRC. The Government announced plans for MTD in 2015 and up until now, it has only applied to VAT reporting. However, from April 2026, businesses and the self-employed with a gross income of £50,000 or more in the year to 5 April 2025, will be required to report their income and expenditure. They will also need to file their taxes quarterly, with the first filing due by 7 August 2026. From April 2027, this will extend to those with a gross income of £30,000 a year and from 2028, those earning £20,000. Fiona Fernie, a partner at Blick Rothenberg says: 'This will not change their actual tax liabilities or the payment dates on which income tax has to be paid. Which begs the question, what is the point of MTD?' HMRC has previously said that MTD is designed to make it easier for businesses to keep on top of their tax affairs. Fernie said: 'However, this is a weak attempt to justify the introduction of MTD, as it is perfectly possible to obtain these benefits by using an up-to-date spreadsheet and the Government Gateway. 'MTD requires businesses and individuals to pay for third-party software to do their returns as opposed to these free methods./' She adds: 'Because of this, I find it difficult to believe… that businesses already using MTD are reporting saving on admin time, reductions in input errors and increased confidence in managing their tax affairs. 'It is not possible to determine whether people are making more accurate returns because they use MTD. Data entry is just as likely to be done incorrectly on an MTD platform as on a spreadsheet or the Government Gateway.' A recent report by the Public Accounts Committee said MTD would generate extra revenue but cost self-assessment taxpayers £200million more than they save, which is 'completely intolerable'. It also said that while HMRC was pushing taxpayers online, it had 'allowed' its legacy IT systems to 'become out of date'. Fernie added: 'The concept that taxpayers are hit with an obligation to file additional returns, but will not be provided with the means to do so unless they incur a cost feels unfair. 'This appears to fly in the face of the taxpayers' charter which specifically states: "We'll provide services that are designed around what you need to do, and are accessible, easy and quick to use, minimising the cost to you."' HMRC was contacted for comment.
