Enterprise Nation

HM Revenue & Customs has responded to a petition signed by more than 100,000 people protesting against plans for quarterly filing of tax information which they say will impose additional costs on small businesses.

As confirmed in the Autumn Statement, HMRC's plans to digitise Britain's tax system will require most small business owners to submit tax data to the government online every three months.

Ministers have described the change as "transformative" but campaigners hit out at the plans saying a requirement to file tax returns quarterly will lead to red tape and extra costs.

Business owner Paul Johnson started a petition calling for the plans to be scrapped. He has attracted more than 103,000 signatures. 

"As a small business owner myself I already spend quite some time to get things in order once a year", Johnson said. "There will be [sic] greater chance of errors as well. At the moment we pay £1,200 a year in accountancy fees [sic] this figure will greatly increase."

But in its response HMRC said: "Making Tax Digital will not mean 'four tax returns a year'. Quarterly updates will largely be a matter of checking data generated from record keeping software or apps and clicking 'send'."

The government department added:

  • Quarterly updates will not involve all the complexity of a full tax return. The updates will be generated from existing digital business records. In most cases, little or no further entry of information will be needed. It will be much quicker to complete than the current tax return
  • As part of the process the business owner or individual will receive a developing in-year picture of their tax position, helping people have greater certainty about what they owe, allowing them to plan their finances more effectively. This differs from the current system where many taxpayers are caught out by their tax bill when it finally arrives
  • In-year updates will not be subject to the same sanctions for lateness or inaccuracies as apply now to the year-end position

HMRC said it will ensure free tax apps are made available and business owners will be signposted to what's available.