Death of the annual tax return: a nail in the coffin for accountants?
In his 2015 Budget, George Osborne confirmed plans to scrap the requirement to submit annual self-assessment tax returns in favour of a digital tax account system – the intention being to enable individuals and small businesses to submit accounts throughout the year via computer, tablet or smartphone. Assuming a smooth transition, this could potentially alleviate the customary ‘annual panic’, transforming the system of self-assessment into a more relaxed, real-time affair. While some welcome the fact that HMRC seem to be embracing the digital age, others have voiced concerns.
Flexibility seems to be the name of the game with taxpayers being able to settle their tax bill at any point throughout the year, or opt to spread the cost by way of instalments. Each taxpayer will be given a secure login allowing them to submit information regularly. Some have questioned whether this merely represents an updated version of the current online system – already used by around 85% of those who complete self-assessments.
The main difference seems to be the addition of pre-populated data comprising information already held by HMRC as well as various third parties such as pension providers and banks. Businesses and individuals will also be able to link their own accounting software to their digital tax account thereby streamlining the process and, in the eyes of HMRC, helping to give an overall picture of one’s tax affairs. In the eyes of critics, however, it is one step closer to ‘Big Brother’ with HMRC seemingly having access to each and every financial transaction carried out.
A question that has been posed is what of those who are digitally disenfranchised? Criticism has been levied at HMRC for ‘assuming’ digital competence amongst all self-employed taxpayers, but they counter this by allowing those who wish to continue filing an annual paper return to be able to do so, although for how long remains unknown.
This digital switch is due to commence in early 2016 for 5 million small businesses and 10 million individuals and should be in full swing by 2020.
Hailed by the Chancellor himself as “a revolutionary simplification of tax collection” some query whether this simplification will have the effect of driving business away from accountants. In an age where technology is at the heart of everything, is this another example of computers taking over traditional accounting functions? Does it represent a nail in the coffin regarding the role of the accountant?
The answer to this, of course, largely depends on one’s view of an accountants’ role – which may in itself differ from firm to firm. At Stanes Rand, we see our role as significantly more than just crunching numbers. Our purpose is to have a profound effect on your business – something that can only truly be achieved by spending time getting to know our clients and their businesses. We provide a unique combination of consultancy, wealth creation and business development advice – services that even the most advanced technology will never be able to replicate.
Whilst we fully embrace technology – not least due to the significant benefits it brings in terms of increased efficiency – both the need and desire to dedicate time to developing and maintaining client relationships will never go away. We believe it is these relationships that are key in enabling us to offer truly personalised help and advice. So whereas advances in technology may alter the need for accounting tasks previously done manually, they will not alter the need for accountants per se, as what are the chances HMRC will take on the role of engaging in effective tax planning on an individual basis?