The way the Revenue handle their account with you, the tax payer, is changing. They want to bring all their online systems together so that you and they will have real time knowledge of your tax affairs.
Currently they collate information about you from various different sources, for example:
- Your bank tells them the interest you have been given.
- Your employer gives information on your salaries.
- The benefits system notes your child benefit.
Currently all this information is held on separate data bases, the Revenue then laboriously cross check the information. Their plan is to hold all this data in one place and give you access to what they have on you.
The aim is to keep your tax information more up to date. This will enable us to prepare your tax return continuously by amending and updating your records. You will always know what is owed and when you have to pay it. There will be no miss matches between the information the Revenue has and the tax returns submitted.
What does it mean?
In practical terms it means that we will need to review your tax account quarterly, tax will get paid earlier, and the tax return, once a year will be replace with four mini returns.
It will be phased in between now and 2020.
What will be the impact?
The Revenue is going to get information about you earlier. At the moment you pay corporation tax 9 months after your year end and your income tax on the 31st January following the tax year end. This makes the tax lumpy and paid in areas. The Revenue would like to see this paid more quickly, they will also be aware that paying it in smaller ‘bites’ as it is earned should make it easier for tax payers to pay on time. In this regard self employment will become more like PAYE.
Your accounts will need to be up to date each quarter. It will become much more difficult to do the supporting paperwork to support what you’ve done retrospectively.
What do we need to do to prepare?
I think the main thing is to get organised; never a bad thing. Having decent software such as Xero will become even more important.