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Quarterly digital reporting to HM Revenue & Customs opens to self-employed individuals

Since March this year, self-employed individuals have had the option of reporting their income digitally to HM Revenue & Customs (HMRC) as part of a pilot of the Government’s Making Tax Digital (MTD) programme.

The Government has long had the ambition of taking most taxes including Income Tax, VAT and Corporation Tax onto a system of quarterly reporting using ‘designated software packages’ under the auspices of MTD.

However, the scheme was delayed repeatedly, with the relevant provisions of the Finance Bill being removed ahead of last year’s snap general election to ensure its safe passage through Parliament before voters headed to the polls.

Initial plans to introduce MTD for VAT on a mandatory basis in April of this year were ultimately pushed back to April 2019 and it is not yet known when MTD will become mandatory for other taxes.

HMRC has now opened up a limited test of MTD for Income Tax to all self-employed individuals and it is expected that the trial will be opened to all unincorporated landlords as well at some point this month.

However, with software providers concentrating their efforts on preparing for the start of MTD for VAT next year, there are currently just two packages supporting MTD for Income Tax, something that is likely to put off many self-employed individuals in the short term.

Link: MTD income tax pilot revealed

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270,000 late penalty notices cancelled by the Revenue

A response to a freedom of information request has revealed that HM Revenue & Customs (HMRC) cancelled 270,000 late penalty notices in 2016.

However, this figure was dwarfed by the 610,000 cancellations in 2015 and the 400,000 cancellations in 2014.

The request was made by a partner in a ‘magic circle’ law firm, who was himself issued with a late penalty notice, despite having submitted his tax return in December, ahead of the 31 January deadline.

Despite having filed on time, when HMRC overturned the penalty in March this year, it nevertheless issued a letter, stating “if you file on time we won’t charge penalties”.

While HMRC revealed the number of late penalty notices that were cancelled over the three-year period, it did not disclose how many of these were the consequence of errors on the part of the Revenue, as opposed to the taxpayer having a reasonable excuse for late filing.

A spokesperson for HMRC said: “We don’t want penalties, we just want tax returns. Taxpayers with a reasonable excuse for filing late or who have been taken out of SA do not have to pay penalties. Taxpayers who file on time are not issued with penalties.”

Link: HMRC cancels 270,000 late penalty notices

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