MPs have been told that possible tax reforms post Covid, coupled with increased digitalisation could save accountants from spending their lives ‘doing pointless repetitive tasks’ such as calculating tax returns
The Treasury Committee held an evidence session as part of its inquiry into tax after coronavirus to seek views on whether the tax system is in need of reform, and if so, which areas are most in need of it.
Witnesses that attended the online evidence session were:
• Charlotte Barbour, ICAS director of taxation
• John Cullinane, CIOT head of policy
• Anita Monteith, ICAEW senior policy advisor
Mel Stride, Conservative MP and chair of the Treasury Committee, opened the session by asking each witness to provide the panel with two examples of taxes which need reform.
Charlotte Barbour said: ‘Up until now anytime there has ever been any mention of doing anything to VAT, people have said “oh no you can’t do that because its European and you can’t touch it”.
‘Post-Brexit there is going to be a huge clamour of everybody wanting everything done to VAT and it’s a tax that raises an awful lot of money so you need to be cautious that you are not going to lose a huge amount.
‘I think VAT is quite a tricky tax, it the most litigated tax, because you are taxing different transactions and you’ve got to define those transactions.
Treasury Committee member and Labour MP, Angela Eagle, replied: ‘You’ve talked about the fact that now we’ve come out of Europe we can remake some of these taxes without some of the constraints that we all operated under being in the EU, but do you think that its possible to do that, and simplify without compromising fairness?
Anita Monteith answered: ‘I think fairness and simplicity have always challenged one and other, for example going back to John’s example of the high in come child benefit charge.
‘When that was first introduced people were bending over backwards to see what would be fair to give child benefit to generally the mother or whoever was looking after the child, while also having to means test it by the backdoor, which leant to greater unfairness of course because you ended up with someone else having to pay the money back through the tax system.’
Monteith added: ‘We are also in danger of creating problems with the new capital gains tax (CGT) charge on your residence property, which now has CGT to be paid on the sale of a property you’d let out within 30 days of the sale.
‘Now I very much doubt that the general public would know about that letting agents or lawyers are telling people when they first put their properties on the market.
‘Are they ready, do they know that they are going to have to pay cash quite quickly?’
Eagle said: ‘How could you migrate from a very complex system to a simpler system without having massive numbers of losses, which our chair has said is sometimes politically undeliverable.
Monteith added: ‘I don’t think we will suffer great losses from it, its more a question of making sure our IT services are sufficiently joined up and doing the job that they’ve been designed for, to make it easy for people to pay their taxes.
‘The CGT for instance, is something that, if it could be built into the conveyancing system, perhaps an alert just so that people know they have to pay it.’
Eagle asked: ‘There are lots of increasing software that allow you to do your own tax returns and that’s becoming more and more popular. The jobs are likely to be automated when you look at future analysis of where we ought to be going.
‘Accountants suffer rather badly from having no future at all because they are likely to be taken over by this software, do you worry about that at night?’
Monteith replied: ‘Not at all, I would say it’s going to be three hearty cheers from the accountancy profession when all the drudgery is finally computerised so we don’t have to do those buts and we can do what were actually trained to do.’
Eagle: ‘So you feel like as an accountant you are drowning in sludge with these taxes and you’d like to do higher more noble things?’
‘Yes, and you can help a lot more people as well.
‘You don’t want to be spending your life doing pointless repetitive tasks when you’ve been trained to apply your knowledge properly.’
Full meeting is here