It could start as soon as 2018!
We first mentioned this process back in September 2016 (“HMRC wants you to be software savvy“) after HMRC announced it’s intention to shift as much of the tax system as it can online.
Fundamentally businesses will be required to:
- Keep digital records
- Update HMRC with quarterly reports
- Provide an end of year submission/annual taxable profit calculation
There is likely to be a staged introduction to the changes, starting in 2018. Although that sounds a long way off Lewis Smith & Co. suggests that you start considering how you intend to fulfill HMRC requirements sooner rather than later.
Larger firms using accountancy software such as Sage will be naturally compliant with the new requirements.
For smaller businesses currently using spreadsheets or manual cash books the transition to simple accountancy packages such as KashFlow or Xero (which Lewis Smith & Co. supports) should be straightforward. The issue to consider is making sure you can put in place the processes to keep the systems updated and produce the required reports.
The real challenge may be for companies using bespoke management system (legal firms, dentists and doctors for instance) which handle financial transaction but don’t currently communicate with HMRC. We recommend that you approach your system providers now to understand whether they will be making appropriate upgrades. If they aren’t aware of the necessity or have decided not to make the required changes then you might to make a bigger transition than you thought.
Why not discuss Making Tax Digital with Lewis Smith & Co.? We can help you plan for the changes well in advance and ensure your business is fully compliant.
Lewis Smith & Co. – Accountants for Quarry Bank businesses