HMRC Targets The Unrepresented in Basis Period Reform

The UK tax system is complex and ever-changing, and in 2024, HMRC will introduce a major change known as Basis Period Reform. This change aims to simplify tax calculations for businesses and individuals, but it has also sparked confusion and concern among unrepresented taxpayers ...

So, what exactly is Basis Period Reform and how will it impact UK taxpayers? Currently, taxpayers in the UK can choose their yearend and draw up accounts to that year end annually. Tax is then accounted for on the profits and losses arising during that year.

"This period is known as the basis period!"

Under the current system, taxpayers with a 30th of April year-end have a full 20 months to prepare their tax returns. However, those with a different year-end, such as 31st March, have a shorter period to report their income and expenses.

Basis Period Reform will change this by aligning the basis period with the tax year for businesses. This means that all taxpayers, regardless of their year-end, will have 10 months to prepare their tax returns. This change is expected to simplify tax calculations and reduce the burden on taxpayers.

While Basis Period Reform may seem like a positive change, it has raised concerns for unrepresented taxpayers. These are individuals and small businesses who do not have an accountant or tax advisor to assist them with their tax affairs.

If you are an unrepresented taxpayer, it is crucial to understand the implications of Basis Period Reform and take necessary steps to prepare for the changes:

- Firstly, it is recommended to start keeping accurate and up-to-date records of your income and expenses. This will ensure that you have all the necessary information when it comes to preparing your tax return.

- Secondly, consider seeking professional advice from a tax advisor or accountant. They can help you understand the changes and assist you in preparing your tax return accurately.

- Lastly, it is essential to plan ahead and budget for any potential increase in tax bills. By staying organised and informed, unrepresented taxpayers can navigate Basis Period Reform and avoid any surprises when it comes to tax time.

It is no secret that HMRC is targeting unrepresented taxpayers with Basis Period Reform. This is evident in their recent efforts to encourage individuals and businesses to seek professional tax advice.

Basis Period Reform is a significant change to the UK tax system, and it is essential for all taxpayers to understand its implications. Unrepresented taxpayers, in particular, must take the necessary steps to prepare for the changes and seek professional advice if needed.

Remember, preparation is key; and seeking professional advice can save you time, money, and stress in the long run.

If you'd like to find out more about anything I've written here, do call me on 01908 774323 or leave a comment below and let's see how I can help you.