A brave new world is afoot as the tax system prepares to become fully digital. Rawlinsons Partner Julie Bloodworth outlines what we can expect and how to embrace the coming changes
Whether it’s online gaming, food shopping, advertising or socialising, everything we now do is made ‘simpler’ through the digital world. Even HMRC is on board, making tax digital. HMRC plans to move to a fully digital tax system by 2020. This, they say, will make keeping up to date with our tax affairs easier. Like it or not, this is the world we live in. Rather than fight it, it’s far better be prepared and embrace the change.
Bearing in mind most people and businesses already file their tax and VAT returns online, you may be wondering what exactly these changes are? As the tax man would say, the plan is simple! ● In March 2015 the Chancellor set out his plan for the following five years. At the end of this period the Self-Assessment tax return will no longer exist.
● During 2016 every tax payer will be issued with their own digital tax account.
● From 2018 most businesses, including the self-employed and landlords, will have to start updating HMRC ever quarter. From this year onwards HMRC will begin to pre-populate income tax, National Insurance and digital tax accounts with information it receives direct from third parties, for example bank interest.
● Then from April 2019 Capital Gains Tax not covered by Principal Private Residence Relief will have to be paid within 30 days of the disposal of a residential property.
● By 2020 companies will need to update HMRC quarterly on Corporation Tax while the full range of HMRC services should be made available through digital While HMRC claims that these changes will make life simpler, there has been a lot of criticism regarding the additional costs they will create, particularly for small businesses that will need to update software and commit the time to report not once but four times a year. HMRC has already postponed some of the consultations that were due to be released in relation to this project, so whether the current proposed timeline will be kept to remains to be seen.
Help is at hand
At Rawlinsons we want to help our clients manage these changes and we are already telling them what to expect. In addition we have recently launched Rawlinsons Connect, an online accounting service that leverages modern technology to help deliver expert business support. The benefits of online accounting include: ● 24/7 access to up-to-date financial information and reports from any device with an internet connection – even a smartphone or tablet.
● Up-to-date information to help us and our clients manage their businesses better.
● Automatic processing, with bank information feeding directly into the accounting software to bring lower costs and greater efficiencies.
● Apps to make record keeping simpler. For example, photos of invoices which can be imported into the accounting software.
● Intuitive software which recognises transactions and suggests appropriate entries to save manual input. With Rawlinsons Connect, we can deliver an even more valuable service to our clients because we can monitor their records and give them pointers throughout the year. It will also mean that clients who are using this software will find it easier to deal with the increasing number of deadlines created as a result of HMRC’s digital tax plans.
Rawlinsons Chartered Accountants Ruthlyn House, 90 Lincoln Road, Peterborough, PE1 2SP. 01733 568321, www.rawlinsons.co.uk