It is essential that as a small business owner, you learn your tax obligations, otherwise your firm could incur significant financial penalties. You should be aware that 2017 will see a huge shake-up in British tax return reporting, as Whitehall clarifies its ‘Making Tax Digital’ programme. Turner Little reports.
Government plans
‘Making Tax Digital’ will see the UK government move all tax matters online by 2020. This year, will publish proposals as part of the initiative that will require small to medium-sized enterprises (SMEs) to complete their quarterly tax returns online. If you own a small company, you will no longer be able to wait until the end of the financial year, to handle your taxes.
However, many SME heads are unware of the changes which are due to come in under ‘Making Tax Digital’ in 2017 and thus, are unprepared to handle their new tax duties. We should note that you will have to report your business’ taxes every quarter, send an end-of-year tax return and record maintenance through software which is compatible with HM Revenue and Customs’ (HMRC) system.
But unless your firm earns under £10,000 per annum, you will now have the option of sending ‘pay as you go’ tax statements to HMRC, instead of reporting twice per year. These policies will be rolled out starting in April 2018, when income tax and national insurance contributions for larger firms will be digitalised, with the changes coming in for the smallest firms in 2019. We advise you to start transitioning from a paper-based to a digital tax recording system now, to prepare for these changes.
Cloud accounting
You may wish to utilise a cloud-based accounting system, such as those supplied by companies like Sage, to reform your firm’s tax reporting system. With this strategy, you can update your tax information at your convenience, promoting flexibility. You will also benefit from invoice scanning, real time financial reporting and more, simplifying the process of sending your tax details to HMRC.
But the government’s tax changes are meeting resistance from British SMEs. The concerns many small business heads are expressing over Whitehall’s plans include the security issues involved in moving business data to cloud-based systems, from their own servers. Others are concerned that training up staff to work online via web-based systems like Drop Box could prove difficult and expensive.
We should note that the initiative will put an end to ‘shoebox accounting.’ When looking for an accountant, take their experience with cloud technology into consideration, as they will soon be obligated to provide cloud-based accounting services. Accountants will also have inform clients how they will need to change their operation models, to comply with the ‘Making Tax Digital’ programme.
Expert aid
With ‘Making Tax Digital’ bringing changes to your firm’s tax reporting requirements, you could take this opportunity to re-examine your financial infrastructure. You may want to switch business bank accounts, for instance, to make your operations more efficient. As registered bank intermediaries, Turner Little issues the UK business banking advice you need to ensure your firm thrives.
Turner Little
Turner Little was founded in 1998 and it has since become a well-established UK based professional Company Registration Agent, Registered Bank Intermediaries and Business Consultants, as well as Trust provider. You can receive our monthly newsletter by signing up using the form below.
