Advisers have been warned they may face a raft of extra paperwork as a result of the way the forthcoming Making Tax Digital system works.
Making Tax Digital is a system of filing tax returns which HM Revenue & Customs is rolling out. It will be mandatory for the self-employed to file their tax returns in this way from the 2023-24.
John Hemming, a former MP who now runs a tax-focused software company, warned that as part of this, tax information will have to be submitted every quarter, rather than annually.
He said this could lead to a problem for VAT registered firms, as they may have different quarter days on which they have to file VAT returns and income tax information.
Mr Hemming, who now runs Cirrostratus, said: “The self-employed will be expected to submit tax information every quarter. Many self-employed people are also registered for VAT. VAT has always required quarterly submissions.
"If self-employed people don't make sure that their VAT quarters are the same as their self-employed tax quarters in advance then they will end up doing eight sets of accounts as opposed to four sets of accounts."
"Hence the most efficient thing that the self-employed can do is to fix their quarter dates for self-employment to be the same as their VAT periods. This may mean that some people may need to move their VAT quarter.
"If people do VAT on a monthly basis it will be easier, but they then need also to make sure that their tax year is April 1 to March 31. HMRC will treat this as being equivalent to April 6 to April 5, but it still needs to be sorted out in advance.”
HMRC does not currently have a mechanism which allows the quarter dates to be changed once a tax year has started. Mr Hemming said he is not sure there is a way such a fix could be added to the site.
HMRC has said the improved accuracy digital records provide, along with the help built into many software products and the fact that information is sent directly to HMRC from the digital records, avoiding transposition errors, will reduce the amount of tax lost to these avoidable errors.
It added: "We have consulted with stakeholders throughout the development of Making Tax Digital, both formally and informally.”