HRMC has just published the results of a study it conducted with 41 agents to assess building risk triggers in third party Self-Assessment (SA) software.
According to HMRC, the majority of income tax SA customers use an agent to assist them with their return. With an estimated £7 billion in losttax due to error and failure to take reasonable care, a key aim of HMRC is to find ways to reduce this. One idea has been to introduce 18‐20 HMRC‐defined “risk triggers” in third party SA returns software.
”Risk triggers” are used by HMRC to identify individual entries on SA return submissions that fall outside expected, pre‐defined parameters or ranges, and therefore flags figures which may be mistaken or deliberately misleading.
The key aim of the research study was to understand how risk triggers influence agent attitudes and behaviour when using SA returns software. HMRC interviewed 41 agents (out of a total of 65,000) and one of the findings from this relatively small sample was that tax agents found the risk triggers to be useful additional checks. They reported instances of double checking figures, occasionally with clients.
Agents interviewed, however, were also generally confident in their own professional abilities and performed their own checks of client data before using the software. They then saw no reason either to be concerned by the triggers or to amend figures in response to them.
The results of the survey paints a mixed picture and we’d be keen to hear your views on whether you’d find risk triggers in our SA software helpful.
In the study, the triggers which the agents had most commonly experienced were those relating to:
- Expenses
- Capital introduced
- Drawings
- Expenditure to gross profit
- Sales to purchases ratios
- Cost of sales / turnover
- Professional costs
Complete our 5 minute survey to give us your opinion on whether you would like SA software to warn you (prior to submission) that entries on a tax return fall outside HMRC’s expected, pre-defined parameters.
You can also read the HMRC’s research report here
