HMRC have published a grand total of six consultation documents about their Making Tax Digital initiative. Six? That doesn’t necessarily bode well for business owners who are hoping the changes will be reasonably straightforward!
The proposals reflect the most dramatic changes in Britain’s tax system seen for many years, and they’re tipped to completely change the way taxpayers, accountants and bookkeepers interact with the tax man.
If you’re lost in space about what the changes might mean to you, here’s a brief overview of the information contained in the revenue’s six separate documents.
9 ways the proposed new digital tax system impacts you
- From 2018 onwards most businesses, self-employed workers and landlords will have to keep digital their business records and update HMRC every quarter
- If you run an unincorporated business or are a landlord with a gross income or annual turnover of less than £10,000, your entry to the new system will be deferred for a year
- If you honestly cannot use digital tools for some reason, you’ll be entirely exempt
- If you feel you shouldn’t be involved in the new system and don’t belong to the groups mentioned above, you can appeal during the consultation process
- HMRC is thinking about simplifying various tax rules to support the changes, including extending the ‘cash basis’ to bigger businesses and those involved in the property market, with the aim of reforming the basis period rules and making GAAP accounting reporting easier
- The revenue is exploring a new ‘voluntary pay as you go’ system for businesses and landlords who fall into line with the new system
- HMRC’s powers of compliance and enquiry might be changed to reflect the new reporting and filing requirements
- HMRC might bring in a new regime of late submission penalties, late payment sanctions and proposals designed to bring interest in line across all types of tax
- HMRC are exploring how to use third party information to help change the tax system for the better
Read the documents yourself… or ask us!
If you want to actually read all six HMRC consultation documents, here they are.
- Making Tax Digital: Bringing Business tax into the digital age (
- Making Tax Digital: Tax administration
- Making Tax Digital: Voluntary pay as you go
- Making Tax Digital: Transforming the tax system through the better use of information
- Simplifying tax for unincorporated businesses
- Simplified cash basis for property businesses
If you’d rather get the inside story from someone who talks plain English and can explain things in terms everyone can understand, give us a call!