Stuck In The Tax Maze?
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In a massive step forward to reducing errors and making it easier for your business to manage and pay any tax owed, or receive a refund, HMRC today revealed its 5 year road map that will place your business (and individual) tax in its own unique digital wrapper. This will talk directly to your accounting software or for those who currently working off line and maybe still running your business from an excel spreadsheet, an application that will be provided free of charge by HMRC, to cover the bare minimum.
In a nutshell what this means is you won’t have to supply information HMRC already has. Instead it will pull all that together and place it in your digital account. This will make it easier for you to check, update and pay any tax owed.
Further consultations will take place next year to determine the frequency of reporting that will be required under the new system, in particular whether quarterly reports and associated payment of corporation tax will come into play, even though there will no change to the annual basis of taxation. This question is important as the scope for real time payments will become a reality and the associated discussion paper, also released today, to look at “simpler” tax payments, starts to explore this.
Sceptics might suggest this is just a mechanism for HRMC to collect tax in real time, rather than arrears and argue the negative impact this could have on small business and cash flow. However, it is important to see the bigger picture here that we have an outdated tax collection system in massive need of modernisation and we need a simpler mechanism that reduces the scope for error and makes it easy for us all.
To look at the slides released today please follow the link or for any questions call as at Rift Accounting on 01233 653006 to see how we can help.