Businesses should take urgent action ahead of the government’s sweeping changes to the tax system.
Making Tax Digital is an HMRC initiative to compel businesses to keep digital records and file quarterly updates. With a launch date of April 2018, the programme has what experts at Thomas Westcott describe as “huge implications”, particularly for small businesses and the self-employed who will be the first affected.
Dale Simpson, tax partner at Thomas Westcott said: “What HMRC is trying to ultimately achieve through Making Tax Digital is the scrapping of all information being gathered in a single annual tax return and instead replaced with quarterly reports submitted digitally.
“So, no more paper tax returns, apart from exceptional circumstances, and software will need to be in place together with businesses’ accounting systems, and their accountants, properly prepared for the changes.”
Nationally Making Tax Digital has received a poor response, with a recent survey suggesting the overwhelming majority of small to medium sized businesses – those who will be required to comply first – having no idea what the scheme is and how it will impact their operations.
Politicians too have reacted to the plans, with MPs in the Treasury Select Committee calling for Making Tax Digital’s implementation to be pushed back by a year to April 2019. However HMRC seem determined to stick with the April 2018 start date despite wide criticism of their ambitious timetable.
“Regardless of what’s happening nationally we are focused on HMRC’s current timeline and advising clients to act now to put appropriate systems in place ahead of spring 2018,” said Dale Simpson.
“We understand that the changes to digital record keeping are a big challenge for many tax payers which is why we have ensured there are fully trained experts on hand to help clients choose, implement and then use the most suitable software packages,” he added.