Politicians have meddled with the tax system so often (without prior consultation) that HMRC cannot work out the right or (as they say) the “fair” amount of tax correctly.
What’s more the problem covers many taxpayers
Take someone with salary income of just £8,000, bank interest of £2,000 and dividend income from their own company of £27,000 (in 2016/17 – not an untypical situation). If you were to rely on HMRC’s own online calculations, they’ll say you owe tax of £1,575.
However, by allocating your tax free personal allowance a different way, the tax you owe should be just £1,425 – this is £150 less. In some cases, HMRC are over-calculating tax you owe by more than £1,000!
Working out the correct tax
Our software (along with many others now) works out the lowest possible tax in all circumstances, so you won’t be affected by this as we guarantee to calculate the correct amount of tax. BUT in all affected cases, HMRC can only process any such affected tax returns by post. Quite honestly, it is a disgrace!
And so much for HMRC insisting that by 6 April 2018 small sole traders, partnerships and property landlords will have to submit quarter returns to HMRC digitally. Yes after the election, whoever is in power will almost certainly enact the Making Tax Digital legislation making it compulsory for many small businesses to file returns every quarter using digital software online.
Stay up to date with tax changes
We will keep everyone advised as to the progress of Making Tax Digital (MTD) following the general election. But HMRC’s insistence on making MTD compulsory, starting with small businesses who in many ways are least able to deal with the effort and cost of changing their accounting software systems AND HMRC’s appalling record of IT software implementation, it seems to us like a car crash waiting to happen!