Using third-party data to pre-populate Tax Returns and simplify the taxpayer experience

I have just read an interesting article about using third-party data to pre-populate Tax Returns and simplify the Tax Return filing experience which will almost certainly happen before the end of my working lifetime (we are already seeing this with the acceleration of the Making Tax Digital process) but whether that will provide a better taxpayer experience is questionable.

Many people see the need to file a Tax Return on an annual basis as a necessary evil, but when this is part of a personalised process of annual support built around getting to know an individual, their family and their business in order to assist them to optimise their taxes, and understand how doing something differently can assist with this, it can be the end to conclude a positive process by securing an reduction in tax liabilities. 

With the UK tax system becoming ever more complicated by multiple tax allowances and reliefs, that are often designed to be removed where income or assets exceed certain thresholds, the Tax Return is a small part of the annual process. The real value is added through the knowledge of claims that can be made and changes to be implemented to achieve the optimisation of tax liabilities. 

Many taxpayers are unaware that those with even very modest incomes and assets have access to a number of allowances that stretch into double figures. In a system where a Tax Return is pre-populated, or prepared by a non-tax specialist, we are likely to see a failure in the claiming of allowances and reliefs that the legislation allows them to claim, through a lack of knowledge or understanding.

When advising clients, whilst part of my role is assisting them with the filing of their Tax Return each year, the benefit of this annual process is that it allows me to invest time getting to know them, their family and business in order to add value where there are changes to the tax legislation or their circumstances that mean there is an opportunity to do something different to save tax, which ultimately allows them to enjoy more income to have a better lifestyle or invest in their family or business.

How many of the reliefs and allowances available do you use? If you don’t know would you like to find out?

#TaxReturn #TaxPlanning #OwnerManagedBusiness # FamilyBusiness