In our latest webinar on the government’s proposals to get freelancers reporting and paying tax more frequently, IPSE’s Andy Chamberlain and Joshua Toovey talked through IPSE’s conversations with HMRC officials, the timetable for the changes, the findings from our latest Timely Payment report and ascertain the thoughts of attendees through a Q&A session.
Attendees were able to benefit from a detailed explanation of the government’s ‘Modernising Tax Administration’ plans, which were broken down into the following three sections:
HMRC’s plans to build a tax system that is “adaptable, resilient and responsive” with the potential to use more real-time information and a digital tax account where all taxes would be in one place.
Would see HMRC extend the requirement to keep digital records, with paper returns and manual inputting of data phased out. Returns would be required through compatible software with returns, rather than payment, required more frequently (at least quarterly).
A government call for evidence on the idea of increasing the frequency of Income and Corporation Tax payments which IPSE has now responded to with our findings from a survey of over 1,000 members. The report will be published next week.
The digitisation of the tax system should result in less of an administrative/time burden for freelancers in both reporting and paying their tax – for some, the days of hunting around for paper receipts should be gone.
Another potential advantage for Making Tax Digital would be the increased ability of government to respond to fiscal shocks such as Covid as the real-time data would enable them to provide targeted and accurate support.
However, for the digitally excluded, an estimated 8 per cent of the population, the implementation of MTD would make submitting and paying taxes a struggle.
The implementation of digitisation could also see HMRC introduce the automated use of third-party data to calculate tax liabilities and potentially even access personal bank accounts – in breach of GDPR laws?
From our latest survey on Timely Payment, we reveal that the majority of freelancers are concerned by the proposals to make the payment of Income and Corporation Tax more frequent.
Limited Company Directors were more likely than sole traders to oppose the plans for more frequent taxation, preferring to pay Income Tax annually whilst sole traders preferred to pay twice a year.
The findings directly fed into IPSE’s response to the government’s call for evidence on Timely Payment whereby IPSE recommended that any such plans to make the payment of tax more frequent, should be on a voluntary basis.
With questions and concerns around how easy it will be to claw back money from HMRC and the use of government-approved software for reporting, the webinar also allowed for a Q&A session.
It was also great to hear about some of your experiences with MTD for VAT, with reports of teething problems at the outset of implementation.
As a member, you can watch the full recording of the webinar and any of our other webinars by accessing our webinar library here.
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