Apparently businesses have nothing to fear from quarterly accounting, that is the message coming from the HMRC bunker.
In an interview Theresa Middleton, HMRC director of Business Customer and Strategy, told Accountancy the question of annual adjustments fitting into HMRC's proposals for quarterly digital accounting (eg quarterly stock takes) would be raised in several consultations which will be issued after the Budget.
HMRC says that it wants to take on board the views of businesses and individuals who would use the digital tax accounts.
"We’ve been clear all along that the quarterly update is not designed to be the equivalent of a quarterly tax return and that therefore we are not anticipating that businesses would need to do stock takes and make their capital allowances claims and other reliefs and adjustments at the quarter point."Were that the case, wrt being "clear all along", people wouldn't have become so worried about it!
"Equally it might be that some businesses might want to be able to do that - we’re not saying that you couldn’t do that – this is very much in the area that we’re going to be consulting on."LOL, businesses especially SME's have more than enough red tape etc to deal with, without the need to have quarterly stock takes.
"So we’re really keen to make sure that businesses are able to contribute to the shape of how we implement this. So, for example, the point about adjustments, which at the moment are made in the returns for the year, right at the end and sometimes after the end of the relevant period, we will be asking how we can simplify this, especially for the unincorporated.It seems to me that HMRC don't have a clue how businesses actually work, and are only now realising that if not properly handled quarterly accounting will become a nightmare for both the taxpayers and HMRC.
At the moment, payment is not in scope but we will be consulting on what line items should be included in the quarterly update.
For those in the cash process, adjustments may not amount to much at the end of the year, and so they can simplify.
What we haven’t done is set out what some of these things might mean in practice, and so for example, in some cases [as with quarterly reporting] people have been filling in the gaps for themselves. In these [stakeholder] events we get attendance from a range of professional bodies – we will share this thinking after the budget."
Oh, and for those of you with partnerships HMRC hasn't got a clue how it will work. HMRC has so far not been able to produce any material on what digital tax reporting might mean for partnerships, which will affect a range of entities including accounting and legal partnerships and other professional services who arrange themselves in this way.
‘For partnerships, this is more complicated.’ said Middleton.Good luck everyone!
Tax does have to be taxing.
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