The government's plans to make all the self employed report to HMRC on a quarterly basis are proving to be deeply unpopular with taxpayers. A petition against the measure has attracted over 105,000 signatures in a matter of weeks.
Once the petition reaches 100,000 signatures it must be debated in the House of Commons.
The announcement of new digital tax reporting for the majority of small business in the UK was made by the chancellor in his Autumn Statement in November 2015. The idea is part of HMRC's plans to go fully digital.
The key issues are cost, both in terms of time in extra adminstration and financially and poor technology.
Whilst larger businesses that are VAT registered are already obliged to file VAT returns quarterly online, this process takes time and many small business will be forced to outsource their quarterly reporting to accountants at a considerable cost.
The Petition: Scrap plans forcing self employed & small business to do 4 tax returns yearly is accessed here: Petitions Parliament.
What now for the Digitally Excluded?
The Low Incomes Tax Reform Group (LITRG) has also called on HMRC to respect the rulings of the courts and make proper provision for those who find it difficult or impossible to use computers.
Anthony Thomas, LITRG Chairman, said:
“We are entirely supportive of HMRC’s efforts to develop ways in which taxpayers can interact with them digitally. Proposals for a digital tax account for individuals and businesses have much to commend them.
“However, every public authority in a democracy must respect the rule of law, and HMRC are no exception. The courts have previously found that digital mandation can infringe the human rights of older or disabled people, or those who cannot access broadband easily because of where they live, if it makes no provision for their needs. Furthermore, the burdens placed on the taxpayer and businesses to provide quarterly accounting data to HMRC is huge, in spite of HMRC’s comments to the contrary. It is simply wrong to ride roughshod over the citizen and we would never support such action.”
In LH Bishop Electrical Co Ltd and Others v HMRC Commissioners [2013] UKFTT 522 (TC), three of the appellants ran their own small businesses. Two of the appellants experienced disabilities which made it excessively difficult or impossible for them to use a computer, and a third lived in a remote area of the country where broadband access was absent or unreliable. All three were of an age which made learning how to use a computer particularly difficult and they would have had to incur the cost of instructing an agent.
The judge held that the regulations which required online filing of VAT returns without providing exemptions for older people, those with disabilities or who lived in parts of the country which were too remote for broadband access, were in breach of the appellants’ human rights and were unlawful under the EU Treaty. In response, HMRC introduced regulations which allowed VAT payers whose human rights would be breached by being forced to use computers and go online to submit telephone or paper returns for VAT, and for PAYE purposes those for whom it was not reasonably practicable to use electronic means of reporting were permitted to submit paper returns.
Anthony Thomas said:
“We strongly urge HMRC to consider the needs of all taxpayers, vulnerable and otherwise, when drafting regulations about making tax digital. They cannot act in isolation without regard for the human rights of taxpayers and other provisions of the general law of the land; when making policy and promulgating regulations HMRC, like all other public authorities, must obey the rule of law.”
