TaxCorporate TaxDigital tax accounts potential boon for advisers

Digital tax accounts potential boon for advisers

Planned digital tax accounts could provide firms with consultancy work, but concerns remain over its framework and timeframe

DESPITE huge potential teething problems, the digital online tax accounts set to be introduced by the government from early next year could prove a boon for practitioners, advisers say.

The government claims the move will make life easier for the 11 million taxpayers and 1.8 million companies who currently fill in an annual tax form.

The accounts will show how users’ tax is calculated and taxpayer information will be automatically updated with information from employers, the Department for Work and Pensions, pension providers and banks. Taxpayers will be able to pay the taxes they owe as and when it suits them – for example, by direct debit.

The switch is scheduled to take place by 2020, with five million small businesses and the first ten million people using their own digital account from early 2016, according to the Treasury.

Following the announcement, a significant portion of practitioners were understandably alarmed. The timeframe, in particular, left many perturbed, while there concerns persist over the role of accountants, HMRC’s ability to cope and the shift in onus to taxpayer.

While fundamental change can prove traumatic, such situations typically provide substantial opportunity, and this shift is no different, claim experts.


“It could be a terrific boon for practitioners,” explains Phil Shohet of consultancy FoulgerUnderwoodKATO.

In particular, he notes, it could spell the end of nervous self-assessment seasons in which practitioners spend the bulk of their time desperately attempting to submit clients’ returns in time, having received all their data unceremoniously late and mixed up.

There is also ample opportunity for firms to help clients new and existing to set up and correctly populate their online accounts.

“You could have a lot of consultancy work about setting them up initially,” says Shohet. “Firms could go back to clients and talk about training them up on the implications of the system generally. They could help them with decision-making, not least with connecting them with HM Revenue & Customs. And later, advising, training and managing the account.”

The role of practitioners is unlikely to be affected once the accounts are up and running either, according to IT consultant and Financial Director columnist Peter Cochrane, who points out clients will still need their numbers checking, while the “various snafus” that will occur will also prove a source of work.


The issue then is the government’s end of the bargain in setting up a functional, agile IT framework capable of processing these incredible amounts of constantly-shifting data.

One such hurdle is the shoddy and frankly patchy availability across the country – particularly in remote areas such as mid-Wales, the Lake District and the Highlands of Scotland, but major towns and cities also suffer – which could form a rather effective barrier to the accessibility of the online accounts service.

Sceptical of the government’s high-speed broadband connections, Cochrane explains. “I’m dealing with a gentleman at the moment who is disabled. Broadband is his lifeline and he’s got less than a megabit [in connection speed]. There are these numbers of ‘so many homes passed’. It’s not about that, it’s about how many homes are connected.”

That being the case – and given that we all have the right to live life offline and conduct business offline, the paper return is unlikely to die off in the way the government announced.

“I live in a village and there are people here do not have and will not have a mobile phone and do not have and will not have broadband,” Cochrane adds. “What’s going to happen is those people will be dealt with using a paper system and they will be charged for that paper. If you’re not online and can’t cope with it online, you’ll be disadvantaged.”

That’ll be music to the ears of the accounting institutes, which are against “digital everything”, noting the continued need for paper forms.


Another area of grave concern is the ambitious timeframe, commencing the roll-out to ten million individuals and five million businesses from early 2016.

The success of that, says Cochrane, will be determined by which taxpayers are targeted.

“This is a Big Data problem writ large,” he says. “My advice to them would be not to start at the top with people with lots of money and work down. I’d start at the bottom and work my way up. I would look at people with very, very simple tax affairs in PAYE and see if we can get that right first and build on that.”

The government, though, does not have a particularly happy history with large IT projects, sharply illustrated in high definition by the Concentrix scandal earlier this year.

It does, however, have some “stellar successes”, says Cochrane, citing the example of car taxation.

“I’m quite enthusiastic about it. It’s exactly what is required and it’s part of a progression of government pushing responsibility down to the individuals. Our accountants have effectively been doing the work of government for a long time and the ultimate step is to push that down to us. We’ll still be paying accountants to make sure we’ve got it right.”

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