Doing an 'Eric Morcambe': HMRC's Tax Assurance Commissioner Jim Harra says that the five returns per year that taxpayers are required to submit under HMRC's Making Tax Digital (MTD) are not accounts. 

Mr Harra has attempted to calm fears over the red tape and cost that MTD will impose on small business in a letter to the Financial Times last week. He claims that HMRC do not want people to file accounts five times a year although under MTD HMRC is asking for most taxpayers to bookkeeping in real time and then report summaries of their transactions to HMRC five times a year.

It appears that Mr Hara does not consider that the figures to be submitted are 'accounts' simply because the figures will be arranged in a different order when they transfer to HMRC and unlike annual accounts will not carry adjustments made for annual accounting purposes. 

The late commedian Eric Morcambe in a TV sketch from the 1970s plays a piano concerto with conductor Andre Previn, and it goes badly wrong. Says Eric to Andre "I'm playing all the right notes. But not necessarily in the right order."

Under MTD HMRC want all the right figures but not necessarily in the order that we are all used to. 

Taking a step back it seems highly illogical that bookkeeping software will not show 'accounts' in some kind of format to the taxpayer as otherwise the figures on their own make little sense.

In his letter to the FT published last Friday, Mr Hara says:

'HM Revenue & Customs will not be asking anyone to file accounts five times a year, nor will we be introducing in-year quarterly payments. Businesses will simply send in-year updates to HMRC using information collated automatically by the same software used to record day-to-day transactions. This will help businesses pay the right amount of tax, taking away the need to put things right at a later date.

Businesses already keeping their records digitally should see no additional costs at all. Free software will be there for businesses with the most straightforward affairs, and we are looking at additional assistance with transitional costs.

We fully recognise that this is a significant change for some businesses, which is why we’re introducing it gradually as well as exempting some of our smallest businesses, but at the heart of digital transformation is a simpler, more efficient tax system that frees business people from red tape and form-filling.'