Accelerated Tax Payments
The government have plans to accelerate tax payments for businesses. These plans will affect all businesses who pay tax under self assessment and includes companies.
HMRC are going to be consulting on simpler tax payments, which unfortunately means more frequently and to be paid at a time closer to the period when the income is received. There aren’t any exact proposals as of yet on how many extra tax payments will be required or when this new system could come into effect.
George Osborne was certainly NOT doing any of us a favour when he announced the end of the tax return, but there are a stream of potential benefits for the government (of course!)
It’s clear from the papers proposed by the government that accelerated tax payments are going to apply to corporation tax, VAT and self-assessed income tax, including Class 4 National Insurance Contributions. The discussion paper also hints that where a business pays Corporation tax and VAT, the payment dates for those taxes could be aligned. This means that corporation tax will be paid quarterly for all companies. The extension of quarterly reporting will be logical for businesses to help reporting on turnover and expenses but glossing over the need to make adjustments for accruals, prepayments and disallowable expenses.
HMRC justifies the hasty tax payments to reduce the burden on taxpayers, stating this will allow easier off-set of construction industry scheme deductions against other tax liabilities. HMRC have cited research which states that small businesses would prefer to pay their tax payments more frequently. This will also help companies moving from making just one payment for Corporation tax 9 months after the year end, to paying quarterly.
Here at K A Farr & Co we think this will increase the burden further on small businesses as their reporting obligations are undoubtedly going to be more frequent and hence more onerous.
If you have any questions about this please get in touch, we are happy to answer any of your queries. Please email email@example.com or call 01704 211 434.