From April 2019 – a year from now, all businesses, with turnover above the VAT threshold will be required to use the Making Tax Digital for Business system. This initially will only be required for businesses to meet their VAT obligations, but all taxes will follow in time.
Making Tax Digital is part of the government’s plans to make it easier for individuals and businesses to keep on top of their tax affairs and make sure they are always accurate. (Personally I doubt this measure is to achieve these goals, I think it is more about removal of personal privacy and a move towards the Big Brother 1984 esk state!).
Every business and individual already has access to their own digital tax account. If you want to find out how to access yours do a little Google, or give use a call and let us help you.
Four pillars of Making Tax Digital
- Better use of information
The idea here is that HMRC should have access to all your information in a single place, and therefore all departments will be able to talk to each other so requests of information by HMRC should reduce.
Additionally, you should be able to see all the information which HMRC holds in a single place, and therefore you should be able to easily correct the information should there be an error.
- Tax in real time
Customers should be able to see how much they owe at any point in time. This will be a benefit for some, but for those in full time employment (the vast majority of UK Residents) this will be little use. The aim of this is that it should prevent errors and stop tax which is owed building up. (Personally, I feel this aim is the government moving to the ultimate position that every Tax account has a Direct Debit setup, with HMRC taking what they think is due at the end of each month)
- A single financial account
HMRC say that taxpayers cannot see a single picture of their liabiulities and entitlements. i personally disagree with this as if I log into my HMRC account I can see exactly what I owe…..which is nothing.
- Interacting digitally with customers
Customers will be able to interact with HMRC digitally at any time to suit them. Accounting software will be linked directly with HMRC systems, allowing customers to send and receive information directly from their software. (Personally I feel this is again a major invasion of privacy, all account records, banking information and tax informatuion will be linked together with HMRC (and any other government department) being able to see exactly when, what and where you spend money).
As you might gather, I’m very sceptical about the true intentions of this legislative change. To me it does simply seem to be a way to monitor UK citizens, and also they will impose the requirements on any foreign nationals who have investments and income in the UK. But watch this space, this is going to be a major piece of legislation which is going to be introduced over the coming months, and will have a larger impact on individuals and businesses.
A Smith Accounting, Huddersfield Chartered Accountants provide a full range of Accounting and Taxation services and can help you comply with your Making Tax Digital requirements.
Further Reading & information
Best place will be HMRC’s own website