HMRC powers and administration

Lessening the burden of tax administration
The Government has relaxed the reporting burden for small unincorporated businesses by increasing the limit at which the cash basis can be used to calculate taxable profits.

The cash basis allows unincorporated businesses to account using receipts and payments, rather than making accounting adjustments at the year end. Currently this is only available for businesses with annual turnover of less than £83,000. However, with effect from 2017/18, the turnover threshold will increase to £150,000, allowing many more businesses to benefit from simplified reporting.

A similar relaxation will be available for most landlords with gross rental income of less than £150,000. Businesses and landlords can still opt to prepare their accounts using accounting principles if they prefer.

While this simplification is welcome, most businesses will still be subject to additional compliance requirements under Making Tax Digital quarterly reporting from April 2018. There will, however, be a one-year delay in the introduction of these requirements for businesses with turnover below the VAT threshold. Such businesses will not need to file quarterly returns until April 2019. A similar postponement is available for landlords.

Finally, HMRC has announced that it will consult with large businesses this summer on its process for risk-profiling those entities in an attempt to promote stronger compliance.

Penalties
The Government will consult on proposals for late submission penalties and interest on late payments, with a view to a consistent approach across taxes.