Making tax digital
The Government has a vision of the future, in which all businesses and landlords interact with HMRC by electronic means only. Paper tax returns will be obsolete, and each business will provide HMRC with quarterly updates of its income and expenses.
This vision is called ‘making tax digital’, and HMRC thinks it will be up and running from 6 April 2018. Not all businesses will be dragged into the digital environment at the same time: companies will have until 2020 to prepare their systems for quarterly reporting.
Very small businesses, perhaps those with turnover under £10,000, won’t have to make quarterly reports at all. The next tier of businesses will start quarterly reporting from April 2019, but we don’t know what size of business will fall into that tier.
In order to supply the quarterly updates to HMRC, the taxpayer will have to use some form of accounting software. We can help you adjust if you are not already using specialist accounting software, or we may be able to take on the entire quarterly reporting process on your behalf.
HMRC envisage that the quarterly reported accounts data will feed into an online tax account for each taxpayer, which can be accessed at any time to check what tax is due or repayable. We should be able to view your digital tax account on your behalf as well.
HMRC is consulting on many questions concerning its digital dream. We should have a better idea of where this is all leading after the Autumn Statement on 23 November 2016. In the meantime, let’s discuss how we can convert your accounting records into a digital format.