Industry News - 1st March 2017
HMRC unveils more about new online tax system
HMRC is forging ahead with its online tax system, which will affect millions of people and businesses across the UK. As outlined in a previous blog, the new project will aim to create a fully digitalised service by 2020.
What is the online tax system?
The ‘Making Tax Digital’ project will require the self-employed, businesses and
landlords with a turnover in excess of £10,000 per year, to keep track of their tax affairs online and update HMRC on a quarterly basis via their online account.
Following an eight month consultation period, with over 3,000 responses from businesses and agents, HMRC has now published further details of how this new system will work.
Key points confirmed:
– Businesses will be able to continue to use spreadsheets to record income and expenditure
– Spreadsheets will link to software to automatically send updates to HMRC
– Free software will be available to the majority of smallest businesses
– The self-employed, businesses and landlords with turnover under £10,000 per year will not be required to use the new system, unless they wish to do so
– Businesses which are not able to move their affairs online will be exempt.
When will this happen?
The new online tax system will be introduced on a phased basis:
– April 2018 – for landlords and small unincorporated businesses
– April 2019 – for VAT
– April 2020 – for Corporation Tax.
According to HMRC, these changes will see the end of the annual tax return, in order to
simplify tax reporting, reduce errors and the tax gap. Taxpayers will have at least 12 months to familiarise themselves with the new systems before any late submission penalties will be applied.
So what does this online tax system mean for you?
This will affect most businesses in the UK. With the requirement to undertake quarterly
reporting to HMRC, this may mean that businesses will have to introduce new online
subscription accounting packages.
We can help
Call us on 01299 488860 if you would like to know more about how these changes will affect you. We can help with all of your tax and accounting questions.
Visit our blog for more tax and accounting news.
More information on the consultations is available on HMRC’s website.