Tax 'payment on account' for OAPs.

martinsurrey

Pennywise wrote: »

A s/e person may have to wait several months before they sell stock they've bought in a month,

and that wouldn't cause a tax issue, as buying stock is not a P&L issue so no tax effect

Pennywise wrote: »

or to invoice for long term contract work in progress done in a month, or to receive payment from credit customers for stuff sold in a month.

I agree that long credit terms would be the real issue.

Pennywise wrote: »

On the other side, would HMRC really like to have to repay tax to a business that's just invested a huge sum of money in a new piece of equipment?

Not a tax effect, that's capital expenditure so capital allowances, so no sudden repayment

Pennywise wrote: »

The idea of paying tax in the month it's earned is fine for the simplest of small businesses who basically run "cash" businesses, but for the majority, it would cripple them.

while I agree it would cause some issues, I don't see how an up to 18month tax deferral is fair, there could be some middle ground, like payments on account are, but a bit more speedy

Pennywise wrote: »

It's why HMRC's "making tax digital" initiative has stalled. HMRC made the same simplistic assumptions and completely ignored the reality of business cash flows. The fluctuations in "profit" and tax payable/repayable from one month to another would be a massive problem for the Treasury trying to fund the country. Having to prepare monthly accounts and submit monthly tax returns would be an enormous burden for business.

I agree, anything with HMRC, especially IT is a nightmare

Pennywise wrote: »

Bigger businesses already have to make quarterly corporation tax payments, and rightly so. They have the resources to do it. But I don't think that crippling huge numbers of small businesses would really do the country much good!

I think the majority of small/mid businesses, such as hair dressers, builders plumbers wouldn't have as much of an issue as you are suggesting, they already submit and pay VAT returns once per quarter (if over £83k TO), with only 37 days for the quarter just passed, adding on a cost analysis to get to a basic profit number for quarterly payments on account wouldn't be too much of an extension.

not saying its perfect, but I think if tax needs to go anyway, its more prompt payment, not slower.

Pennywise

martinsurrey wrote: »

I don't see how an up to 18month tax deferral is fair,

Most businesses will be liable for payments on account, so the average deferral is 3-6 months, not 18. Only the smallest of businesses will get the full 18 months - it doesn't take much profit to get a tax bill of £1,000! - certainly not enough to live on, so it would only be lifestyle/part time businesses who get the 18 months deferral.

martinsurrey

Pennywise wrote: »

Most businesses will be liable for payments on account, so the average deferral is 3-6 months, not 18. Only the smallest of businesses will get the full 18 months - it doesn't take much profit to get a tax bill of £1,000! - certainly not enough to live on, so it would only be lifestyle/part time businesses who get the 18 months deferral.

Yeah, that was a bit sneaky of me!

I don't disagree with you on a lot of your points, I guess I'm just a bit more hard nosed on it.

I could see quarterly payments on account aligned with VAT payment deadlines being viable, so 37 days after the quarter end you pay an estimated tax for that quarter, most small business systems are set up to report to those deadlines, with VAT.

chrismac1

The average HMRC punter or Treasury official has not got the faintest clue what it is like to run a business. Hence these daft payment schemes, quite simply I got sick of trying to explain it to clients time after time and they can all understand "It is bonkers!"

Due to the dividend tax lots of my clients have payments on account for the first time. The "bonkers" note has saved me loads of time since April trying to explain this drivel to everyone.

Making Tax Digital, however, is taking bonkers to a whole new level. Just when you think you've seen everything daft HMRC can throw at you, they prove you wrong.

Wayne_O_Mac

chrismac1 wrote: »

The average HMRC punter or Treasury official has not got the faintest clue what it is like to run a business. Hence these daft payment schemes, quite simply I got sick of trying to explain it to clients time after time and they can all understand "It is bonkers!"

Due to the dividend tax lots of my clients have payments on account for the first time. The "bonkers" note has saved me loads of time since April trying to explain this drivel to everyone.

Making Tax Digital, however, is taking bonkers to a whole new level. Just when you think you've seen everything daft HMRC can throw at you, they prove you wrong.

You're a moron.

loughlini

My reason for raising the issue is that I am retired. My only income is from pensions, not business revenue. I now understand and agree with many of the business-related points raised above but I wonder if pensioners were ever intended to be included in this POA scheme.

My reason for mentioning the Cayman Islands is a reflection of my ironic sense of humour. If corporations didn't stash away their profits there, then maybe HMRC wouldn't have to bear down on OAPs to make up the tax shortfall. I am mindful of the recent Panorama documentary that exposed the vast resources being diverted there for tax avoidance, and the Government's promise to plug the leaky hole and recover some tax.
Where is it?
This is standard Machiavelli. The people responsible for fixing the problem are the same people who are profiting from the existing system.
I have exceed the POA threshold of £1000 by only £28 but HMRC is demanding £560 for 2017/18. Now that I better understand the system I can update my tax set-aside plans.

polymaff

Your reason for raising this issue is that you object to UK tax legislation. As do the Caymanese exploiters you despise.

Your attempt to exploit the term OAP / Pensioner is bogus and exploitative - rather like those that you despise, too.

There are plenty of folk who would welcome your circumstances.

loughlini

No it isn't. My anger is being landed with an unexpected bill of £562 for the first time. When I worked as an IT Manager paying 40% tax I already bought a battle ship and a hospital with the tax I paid.

Merry Christmas.

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