Under the plans announced on March 18, the annual self-assessment tax return deadline would be abolished, with taxpayers filing information throughout the year to a new digital account, enabling HMRC to calculate tax throughout the year.

ACCA says responses to its survey of members immediately after the Budget announcement suggests problems in a number of areas, including the need to input data regularly when it was unclear how small businesses which do not use commercial business accounting software could meet this requirement without adding to the administrative burden. 

Several respondents pointed out that while younger clients did submit all information electronically, a number of older clients still communicated via post rather than email which would make providing regular updates to a digital account cumbersome and time consuming.

Glenn Collins, head of technical advisory for ACCA, said: ‘There is considerable concern that while the idea might sound good, it just will not work in practice. It creates additional, unnecessary burdens for taxpayers and relies on HMRC’s IT system being able to deal with additional pressures.

'There has also been concern that there has been no consultation as to how this might work for the accountancy and tax professions, which have already been heavily relied upon to make the tax system as efficient as possible.’

The ACCA survey also found widespread scepticism as to whether HMRC’s own IT systems would be able to cope with the new requirements, as well as the possibility for errors and therefore incorrect returns resulting in under or overpayments of tax. 

This view is shared more widely in the profession.  Samantha Vanags, tax partner for KPMG enterprise, said the switch to digital tax accounts ‘should, in theory, prompt cheers up and down the country, with none louder than those coming from the approximately 5 million self-assessing taxpayers who run their own businesses’.

‘However, if it’s going to be a truly reduced burden, then information will probably need to be drawn directly from accounting systems. That’s a massive technological challenge for HMRC to achieve in a relatively short space of time,’ Vanags warned.

Iain McCluskey, tax director at PwC, said: ‘The Chancellor took one small step for man, but one giant leap for HMRC and taxpayers with this surprise announcement.

'Although HMRC has been slowly moving to a more digital world with the introduction of real time information payroll and online filing for share schemes, the announcement of the abolition of the widely disliked self assessment tax return form is a very positive, albeit highly ambitious policy.

'One year to implement is a very tough goal - this is a digital transformation of a very significant scale for HMRC, employers, banks and other stakeholders.

‘Those taxpayers who currently battle with errant notices of coding from HMRC will be sceptical of this timeline. It will also be important to ensure that those small number of taxpayers who do not have the technology or skills to access a digital platform are catered for properly when this change occurs.’