You may have heard the distant rumblings of a thing called “Making Tax Digital” – this is the term for the latest financial hoops the government, via Her Majesty's Revenue & Customs, want us to jump through. I was invited to attend a seminar about its introduction presented by Mark Hayden and Daniel Coleman of Whiting & Partners Chartered Accountants & Business Advisors at Huntingdon Marriott Hotel in April.
HMRC have had to revise the start date of implementation, but nevertheless, all of us will need to be keeping our financial records digitally by April 2020. For businesses which file VAT returns, that date is April 2019.
Your first step, if you haven't done it already, will be to start keeping your accounts with an accounting programme which is cloud based. Some examples of these software packages are: Quickbooks, Xero, Sage, and KashFlow. From my own experience I would recommend that you start using a software programme as soon as possible, I found learning how to use it as difficult. Now that I am confident with it, it makes my life so much easier and keeps everything on track. But you will need time to familiarise and also to upload all your client and supplier details and to transfer from your previous system.
An online search will allow you to compare the benefits and facilities offered by each of the softwares and also the cost of them. You should confer with your accountant or book-keeper, because they will need to be able to access and work in the programme that you choose.
"HMRC’s ambition is to become one of the most digitally advanced tax administrations in the world, modernising the tax system to make it more effective, more efficient and easier for customers to comply."
At the moment, the information that HMRC receives from a range of sources is held on separate stand-alone systems, which can result in customers being asked to report, via a Self Assessment tax return, information that HMRC already has, or that it is able to get from elsewhere – for instance from employers, banks, building societies and other government departments. The intention is to tie all these sources in and automate the process. Theoretically, this should make it easier for us all.
To be ready for this when it happens many small businesses and self-employed people will need to update their computers and ensure they have capable broadband connections. It will also be vital to take time to sit down with your accountant and work out your plan of action.
With thanks to Whiting & Partners
Godmanchester: 01480 455575
St Ives: 01480 468931
This article contains public sector information
licensed under the Open Government Licence v3.0.