HMRC changes ahead: making tax compliance digital

Posted by admin at 10:42 on 5 Jan 2018


Companies running share plans are already ahead of the game as regards online tax returns, with the online Employment Related Securities portal now familiar to us all, and the new online trusts registration system getting slowly into gear.

More changes may be afoot. Since 2015, the government has made a commitment to revolutionising tax compliance for businesses and individuals alike by abolishing tax returns for all the relevant taxes. The intention is that each individual or entity will be given a digital tax account. The government has decided to push ahead with this initiative and all businesses will need to start keeping digital records, or update HMRC on a quarterly basis, from 2020. Self-employed individuals and landlords are already required to maintain digital tax records.

In September 2017, draft regulations were published by HMRC setting out the information that businesses will need to provide to them and they will announce details of this consultation by April next year. In the Autumn 2017 Budget, the government also confirmed that it intends to reform the penalty regime and to move to a points based approach. For example, each time a taxpayer fails to make a timely submission they will receive a point. Once the points issued to a taxpayer reach a certain limit they will be issued with a penalty charge. HMRC have confirmed that the points will be issued per tax and per taxpayer or entity. Guidance on the level of the penalties to be imposed has not yet been announced.

Despite the complexities of Brexit and the hurdles to overcome in relation to such a huge shift in tax compliance, the government is pressing ahead with its timetable and businesses should be consulting with their advisors well in advance of the 2020 start date to ensure that they are ready to make the transition.

Please contact RM2 (020 8949 5522 / or consult our free fact sheet downloads for more information about employee share schemes.