Breaking News – Tax:
Government plans to introduce quarterly tax returns and payments have been put on-hold in the run-up to the June election, after fears of its effect on businesses.
The proposed new tax regime for business, digitising tax returns, which had its scheduled plans delayed in the Spring Budget announcement, has now been put on-hold amid speculation that it could be dropped entirely.
The original Treasury and HMRC plans would force millions of self-employed workers, firms and companies to file four (quarterly) tax returns each year. The timetable of its introduction was already controversial as the scheme was due to become law this week, but it has now been dropped entirely from this year’s Finance Bill.
The Government has suggested that the scheme was removed due to time constraints put on the Government by the coming General Election, but the Daily Telegraph reports that a spokesman for Philip Hammond, the Chancellor, would not confirm that the plans were to be reintroduced once the election was over.
The move follows strong opposition from business groups and some senior political figures across all parties. Some critics are warning that the proposals have not received sufficient scrutiny and would risk driving some small enterprises out of business.
The change in plans also follows an Office for Budget Responsibility (OBR) assessment communicated to the Treasury select committee which implies that HMRC’s estimates of the scheme, designed to reduce accounting errors and increase the overall tax paid, and produce more revenue, were “highly uncertain”.
The original plans would have meant businesses and most of the self-employed paying tax every three months through HMRC’s new online system, using special software, with larger businesses having to comply from next year and smaller firms given until 2019.
It is thought that any new progress of the scheme would need to be preceded by having a pilot scheme or a series of pilot schemes and a thorough cost-benefit assessment carried out before any firm commitment is made.
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