Our website uses cookies to enhance the visitor experience (what's a cookieCookies are small text files that are stored on your computer when you visit a website. They are mainly used as a way of improving the website functionalities or to provide more advanced statistical data.). Are you happy for us to use cookies during your visits?
Please note: continuing without making a choice equates to giving us your consent, which you can withdraw at any time via our cookies policy page.

2 hours FREE consultation
Call us now 0203 808 0999

HMRC’s digital road map: What you need to know

A new change in quarterly reporting was announced by HMRC towards the end of 2015. Via a ‘digital road map’, HMRC aims to simplify the payments made by tax payers. However, the news caused concern amongst accountants and businesses due to its sudden arrival, unsupported supposed cost savings and the worry that the reform could result in the need to submit four tax returns a year, which would be time-consuming and impractical.

HMRC, however, quickly clarified that it would not need four lots of actual tax returns, just four sets of reports of business profits. Tax payers obliged to report their profits to HMRC must now keep digital records. While finer details are still being sorted, it is assumed that classic digital formats like Sage, Xero etc. will be acceptable for this purpose, along with basic record-keeping apps.

Paper- or book-based records or spreadsheets, however, are no longer allowed. Accountants will also no longer be able to simply receive three-monthly spreadsheets or records from their clients to check and submit on an ad hoc basis; it must all be entered onto one, cohesive digital accounts package. Anyone still using an older system must learn to ‘go digital’ with immediate effect. The government’s aim is to have moved to a fully digital tax system by 2020 to eliminate bureaucracy, work in real-time to help meet deadlines and improve online access to financial data for all who require it.

According to David Gauke, MP, Financial Secretary to the Treasury, the changes will be subject to stakeholder discussion, and accountants and their customers will be able to have their say. He explains in the opening pages of HMRC publication, Making Tax Digital, “These reforms will transform the experience of millions of taxpayers. More detail about how these reforms will be implemented, and some aspects of their design, will be the subject of further consultation. These consultations will give stakeholders and customers the opportunity to contribute to this work and shape tax administration for a generation to come.”

High street accountants remain concerned, however, about how many of their clients will have trouble switching over to digital records after years of using more traditional, yet problem-free systems, having always filed accounts and paid tax on time. Not to mention the associated costs of moving over. With the system still in its infancy and discussions still going on, it is perhaps to soon to tell what the impact will be. However, this is something on which every accountancy firm is keeping a very close eye.

Leave a Reply

Our website is packed with information to help you in both the Tax Zone and Business Zone
If you need any other help at all, please just give us a call on 0203 808 0999

Sign-up to the IBISS & CO newsletter