When the then Chancellor George Osborne announced the gradual phasing in of compulsory quarterly tax returns the sense of dread among entrepreneurs across the land was palpable.
It is not that such a reform planned by Mr Osborne was not logical, at least not logical if we were all the same, but it took no account of human nature, and in particular no account of entrepreneurial nature.
Not many people enjoy filling in tax returns, and although Warren Buffett once said that he enjoyed paying taxes, not many people do. There might be a level of self-righteous satisfaction in paying taxes, but even those of us who believe in higher taxes to fund the NHS, education, and even income re-distribution, may feel that the process of paying a tax bill is as painful as an unsuccessful visit to the dentist.
But actually, it is not so much the paying of the tax that hurts, it is the filling in of the tax return that really hurts, filling in forms and being an entrepreneur normally go together like a horse and go-cart.
And so they put it off, and off.
But the Treasury is expected to announce a compromise today. Around 1.3 million smaller firms and landlords are to be exempt from the new rule when it comes into force later this decade.
Mike Cherry, who is the national chairman of the Federation of Small Businesses, said: “We’ve been engaging with the Government extensively on this and it is good to see they are listening. Removing small businesses and the self-employed with modest turnovers altogether from the proposals would mean that half of the UK’s 5.4 million small businesses would not be affected.”
A petition to get the government to re-think this rule change launched last year finally garnered 114, 504 signatures. The petition said: “Each self-employed individual and small business will have the added burden of additional red tape, accountancy fees and potential for fines. As a small business owner myself I already spend quite some time to get things in order once a year. There will be a greater chance of errors as well. At the moment we pay £1200 a year in accountancy fees this figure will greatly increase. The conservatives are not working for small businesses in bringing such legislation but adding burden.”
When debated in parliament, the government said: “Making Tax Digital will not mean ‘four tax returns a year’. Quarterly updates will largely be a matter of checking data generated from record keeping software or apps and clicking ‘send’.”