The shift to Making Tax Digital (MTD) will increase the risk of tax overpayments unless Britons become more cautious about their tax affairs, The Institute of Chartered Accountants in England and Wales (ICAEW) has warned.
The Institute says that plans to implement a 100 per cent digital tax system in the UK by 2020 will fall in favour of the Revenue and put taxpayers themselves at a disadvantage – unless they take great care when filing digital tax returns.
Unpopular plans to adopt a quarterly digital reporting regime by 2018 have been described by HM Revenue & Customs (HMRC) as “a great opportunity to build a leading digital tax administration”. But the ICAEW thinks differently.
It says that quarterly reporting will come as a blow to taxpayers who, for the most part, view filling in tax returns as “an unnecessary and unpleasant chore”.
It adds that taxpayers will face a heightened risk of overpaying if their returns are prepared for them by the Revenue – unless they become more “tax savvy” or seek the advice of a third party.
HMRC has previously suggested that MTD will ensure that “bureaucratic form-filling is eradicated and unnecessary time delays are eliminated”.
However, the ICAEW has said that it is “yet to be convinced that this will reduce the administrative burdens on business, particularly the smallest businesses”.