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Digital tax system wreaks havoc with self-employed Brits

Finding it a trial to deal with the digital tax system? You’re not alone, according to a major accountancy trade body.

In fact, the AAT says that all too many contractors, freelancers, and other self-employed Brits are finding it a headache to cope with the system. New research by the organisation found that more than two out of every three small firms – we’re talking sole traders and small businesses with nine employees and less – say that the digital focus of the tax system has gotten out of hand. Nearly one out of every three have had to resort to out-sourcing their accounting business to third parties in order to muddle through the whole ordeal, the AAT also found.

The biggest culprit in causing sleepless nights for SMEs is most definitely the new Real Time Information PAYE scheme, according to the trade body. Survey respondents indicated that they simply didn’t have the understanding or the resources to keep up with all the new requirements, and I for one can understand completely – it’s an absolute trial to try to make heads or tails of RTI right now, especially since it requires the use of specialised payroll software that connects with HMRC directly over the internet.

Honestly I don’t know what the Government is thinking with this zealous focus on online and digital record keeping. Yes, I can understand that it must cut down on shedloads of costly and time-consuming paperwork, but for what it’s worth there’s still a cost to be paid in switching over to a digital tax system, and that cost is paid by employers and SMEs in having to not only acquire software to handle the new requirements but also to learn these systems inside and out or risk not filing their tax information properly.

I for one am not surprised at all to learn that 29 per cent of SMEs with less than ten workers have had to find outside help for their tax filing, especially with the new RTI system that’s been put in place. Thank goodness there are so many highly skilled and qualified contractor accountants willing to work on a per-project basis. Still, it’s an expensive proposition, having to pay someone else to handle your tax concerns, and ultra-small scale SMEs are already strapped for cash in this economy; when every single last penny counts, spending hundreds of pounds on a tax professional can add up to unwelcome and unsustainable costs.

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