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TAX TIP TUESDAY: New Issues Found For ‘Making Tax Digital’ Plans

Our 5-minute read – Tax Tips – for UK doctors and dentists will help you save tax, get organised with your tax affairs and make sure you meet important deadlines with ease.

This article does not constitute advice. Professional advice should be taken prior to acting on any part of it. The Financial Conduct Authority does not regulate tax advice. 

Making Tax Digital (MTD) is a government initiative designed to make it simpler for individuals and businesses to get their taxes done on time and done right. It’s part of a larger goal for the HMRC to be a pioneer in digital tax administration. They’re making changes to the system at the ground level to make taxes more effective, efficient, and easier.

While a noble ambition, the plan has been wrought with multiple delays and is now running into even more setbacks.

Recently, two tax cases settled at tribunal have highlighted potential problems – practical and procedural – for both HMRC and taxpayers. These could potentially affect a lot of people who are trying to comply with Making Tax Digital.

Issue 1: Notices to file

The first case centres on issuing automated notices to file. The individual in the case that was brought forth had been asked to file a tax return but HMRC claimed she failed to do so. In reality, the individual did indeed file ahead of deadline but it was not signed and thus was rejected. The individual did not resubmit within the specified timeframe but did so at a later date and faced hefty penalty fees and late charges.

Despite the fact that the Tribunal ruled that there weren’t any “special circumstances” nor a “reasonable excuse” for the delay, HMRC did not win this battle. Specific language dictated that these particular notices needed to be sent by “an officer of the board” and not by “HMRC” generally, which was not what happened in this case.

The takeaway for taxpayers is to ensure that they are versed in government policy and procedure if you’re faced with fines. And HMRC needs to make sure they conform to the current legislation to avoid any issues.

Issue 2: Computer literacy

The second case pertains to the potential exclusion and problems that could arise for those without access to or knowledge of how to use technology required for filing. While MTD legislation does include language regarding those who might be “digitally excluded”, the wording is in the same vein as that of exemptions for VAT online returns. The crux of the issue is whether or not digital filing is conceivable for all regardless of age, disability, remoteness of location, or anything else.

The exact phrase used in the legislation is “reasonably practical” and in this particular case the individual needed to prove that filing online was indeed that, rather than simply inconvenient. The tribunal actually ruled that the provision of age in fact referenced age full stop rather than potential issues that could arise from age that would prevent electronic filing.

However, they did also uphold HMRC’s decision that the individual involved was actually responsible for filing online. It appeared that the company in question has already been filing Corporation Tax or VAT returns online so there was a reasonable expectation that other tax could also be filed online. On top of that, it was discovered that the individual involved had some sort of personal vendetta against filing online which of course did not merit not filing.

The conclusion drawn from this example is that there are still roadblocks for some people that will prevent online filing and that the requirement is taking “computer literacy” for granted.

Make sure you get the expert financial help you need

There is a lot of legal jargon and precise language involved in tax legislation and not being able to speak the language may cause you trouble.

If you need expert guidance, don’t hesitate to get in touch with the financial professionals at Dental & Medical Financial Services.

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