the looking glass Tax through The next Medium Term Plan
byMalcolm Chambers, CPFA, Chambers Accounting Limited
As the Council of Ministers develops this next plan to direct government activity and its income and expenditure for the next few years, I thought it would be useful to crystal ball gaze where taxes may be over the same timeframe.
Tax returns and assessments Your 2018 tax return may well be the last tax return you will complete on paper, nor will you receive in return a tax assessment completed by a real person. By 2020, using a new computer system being developed for the Taxes Office, you will be required to complete and submit your tax return online, and, as if by magic, you will almost immediately see your tax assessment as calculated by the computer system. Not only that, but the new system will also allow you to request repayment of overpaid tax, review ITIS rates and give access to your tax data.
Now this may be the future direction of the tax administration in Jersey, thereby reducing the costs of tax collection, but it brings with it several issues. Firstly, whilst no doubt the system will be embraced by the computer savvy younger generation, what thought has been given to those who don’t, or won’t, have internet access for whatever reason? As this is obvious, hopefully, they will come up with sensible, sympathetic solutions. Already Revenue Jersey is issuing guidance on this. Secondly, it is to be hoped that the tax return will be as simple as possible to complete as anything too complex is likely to lead to errors. This is linked to another issue, that of increased compliance, investigations and penalties, utilising the staff time released by the new system to check for return errors, both inadvertent or deliberate. This may not be a
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Another issue is how robust and secure will the new system be? Again, this will have been given a lot of attention, but it does have the potential to seriously impact taxpayers, and we need to be re-assured that data breaches and system breakdowns will be minimal. You will, of course, have yet another user name and password to remember as well as some form of electronic signature. These are just a few of the issues that the new system throws up, and whilst many people use the services of accountants and tax agents to help them with their current paper return system, I would anticipate that demand for these services will increase. I hope that the new system fully caters for the work of tax agents by giving them access to client tax data and tax accounts.
New taxes and tax rates The focus over the last ten years has been to retain the 20% tax rate and simplify tax by reducing the number of allowances, all in preparation for the new system. Whilst the tax rate was thought to be sacrosanct, and is unlikely to be changed in the near future, that has not stopped the recent addition of a further 1% long-term care charge, possibly increasing to 2% in the not too distant
future. There is scope, therefore, for the addition of further small incremental charges to meet the costs of States’ services but these will only be for charges which are universal to all taxpayers, for example a health charge or an environment levy. Unlikely for the moment but the precedent has already been set.
Do not forget also that a lot of work has been done in recent
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