On The Spot Blogs
Open Letter To #HMRC - Why Taxpayers Need Accountants
Taxpayers have benefited from recent changes allowing cash accounting for sole traders and simplified company reporting. The press releases accompanying these changes talk a lot about simplification, with the sub-text that enterprise Britain enables small businesses to deal easily direct with HMRC and companies house. There is no need to pay an accountant so say the politicians.
The reality for small business owners is very different.
Start ups are continually surprised that they need several different tax references for one business.
Can't the PAYE, corporation tax, income tax, VAT, companies house references be linked up. Why do I have to set up all these different Gateway links? How do I know if I've missed anything? Do I really have to file a PAYE return every month showing no tax due on separate software? I didn't receive my corporation tax reference. Why doesn't HMRC provide software for partnerships? Do I really have to find a private partnership software provider, pay for it and download that separately?
Once we've set ourselves up online, does there need to be a screen requiring attention every time just to tell me when I last logged in? And to see my tax return on screen, do I have to attend to two screens stating Privacy Guidelines and Download Speeds, every time I log in?
If you get past that, try filling in a Corporation Tax return (CT600).
Clearly prepared by 3 different departments, but then stuck together afterwards. Why else would you need to enter your Turnover to the software 3 times? Can't there be a pick up? Taxpayers don't know what a Participator is. Can't you just say Shareholder? Do you really care about small charitable donations when I'm making a profit and does a whole page have to be devoted to it? I've been told I can claim tax relief for goodwill, but there's no sign of the write off in the deductible expenses. Small businesses can be in the VAT flat rate scheme but the income/costs this scheme generates aren't mentioned in the expenses. Although apparently we're all trying to take a deduction for salaries paid more than 9 months after the year end.
Many small companies have a share premium account (or should have) but the CT600 doesn't allow this. You have to go to the companies house version to get that included.
Apparently lots of small companies have Franked Investment Income (they don't) which requires my attention if I want to pay the correct 20% corporation tax rate. And don't forget you have to notice the question requiring you to claim the 20% corporation tax in the first place. The software doesn't want to make that leap on its own. If you don't know the capital allowances rules, good luck relying on the software. It can't work out £Nil brought forward, spend, allowance and then a £Nil carried forward. You have to pretend you have an opening balance to get the correct result.
Simplification can't be a priority when new VAT rules - from the EU - require start ups with any turnover at all (including below the UK £81k threshold) trying to provide e-services to other EU countries to register for VAT in each of those countries. Definitely one for penalties down the line.
Enterprise Britain is good at software and e-services but in the throws of setting up and trying to earn exports for the UK, it has to remember to deal with this. Governments expect gratitude for the MOSS simplification but forget that the rule in the first place is too complicated! These returns are required quarterly so businesses can't make the most of VAT annual accounting specifically designed for them.
It's simplification for governments and HMRC, for their benefit. It's not simplification for the taxpayer. The taxpayer still needs an accountant to navigate through the rules. You don't know the result until you go through the hoops and after that there might be a change such as the MOSS rules which take you by surprise.
Yours sincerely very tired
Director of The Coal Face Limited