In 2016 HM Revenue & Customs (HMRC) announced its intention to change the way it accepted business accounts. Seen by many industry experts as the greatest change to tax since the introduction of PAYE in 1944, the new initiative was given the title of ‘Making Tax Digital’ and the aim of streamlining the tax reporting process for both those filing returns and HMRC themselves.
Parts of the scheme have since been delayed, and although businesses currently need need to file their VAT returns digitally, both businesses and individuals will be expected to submit their tax returns digitally by April 2021. There is a chance of further delays but it is generally accepted that the digitalisation of tax is an inevitability.
There are four main objectives for Making Tax Digital, they are: better use of information; tax in real time; creating a single financial account, and interacting with customers digitally. HMRC consider that as the majority of businesses are already operating online via banking, paying bills and interacting with customers, it is a logical step to submit and manage tax affairs digitally.
Through our cloud based business and accountancy package, sblive,
we have been encouraging our clients to move to online record keeping and tax filing for some time and with great success. Having access to your accounts and financial reports, in real time and 24/7 not only allows you to better predict and manage cash flow and payments in and out of your business account, but can provide a much more accurate view of your tax liabilities, meaning you can plan ahead and with a clear view on how much tax you will be required to pay. This is all in addition to ensuring you are Making Tax Digital compliant.
It is not only businesses who will be required to submit their tax returns digitally. Private individuals too will be expected to have moved to digital reporting in the next few years. Much like businesses, the benefits for individuals of moving to a fully digitalised system can be great. As HMRC comes under an increased pressure to recoup missed or mis-reported revenues, the risk of a costly and disruptive tax enquiry is heightened, but digital reporting can give a greater level of accuracy and better overview of your liabilities and can alert you when payments are due. We understand however that the thought of a new online system can be daunting for some clients, and offer a fully inclusive service which means we can deal with all of your tax affairs online for you, on your behalf, providing you with the benefits of digital reporting, without the stress of dealing with unfamiliar technology.
Read more about your digital record keeping requirements in the download below: