Making Tax Digital set to transform tax reporting

George Osbourne caught the headlines in March 2015 announcing the end of the tax return for most but many are not aware what will replace this and the impact this will have on their businesses as early as 2018.

HMRC are finalizing their plans to introduce a new way tax is reported. The standard, annual tax return will be replaced with an online, tax account showing all taxes payable in one place.

HMRC’s website states ”

Making Tax Digital is a key part of the government’s plans to make it easier for individuals and businesses to get their tax right and keep on top of their affairs – meaning the end of the annual tax return for millions.

The government announced its vision for modernising the tax system at March Budget 2015.

The Making Tax Digital roadmap set out how this bold vision for the future of the tax system would be achieved by 2020.

Every individual and business now has access to their own personalised digital tax account and these are being regularly expanded and improved.”

HMRC’s have a full overview of the plans at https://www.gov.uk/government/publications/making-tax-digital/overview-of-making-tax-digital

Making Tax Digital is being rolled out in 3 phases, with individuals and unincorporated (sole trade and partnership) businesses beginning in April 2018. This will mean reporting on an on-going, quarterly basis, rather than once per year. This additional reporting will mean it is more important than ever to address the software needs of businesses. Whilst HMRC are intending to have a free software, it remains to be seen how practical this will be and it is likely that many of the real-time, cloud accounting platforms will enable, quicker, hassle free filing.

VAT reporting is set to follow with the phase-in expected by 2019 and Corporation Tax by 2020.

If you’d like to learn more about the impacts of changes, and prepare your business for real-time accounting, contact a member of our team at 0191 4877601 for more details.