Digital Tax Accounts
30th June 2016
In due course businesses are likely to have to submit their tax and financial information quarterly using online accounting software that's compatible with HMRC's systems. This is likely to lead to an increased administrative burden for many businesses, particularly those that are not used to using software.
The exact format, methodology and timing is still under consultation and subject to review. However, the Treasury have recently stated that "HMRC will ensure that compatible software products are available to suit the budgets and needs of all businesses, including some free products for those small businesses with the simplest affairs."
The change to digital tax accounts is also expected to accelerate tax payments, which will increase cashflow pressures generally. HMRC is hoping that all taxpayers will in due course submit their taxes and manage digital tax accounts as part of the day-to-day routine. Individuals and small businesses are expected to have access to a digital tax account by 2020 and this would the remove the requirement for completing an annual tax return.
As to whether Brexit will affect the introduction of digital tax accounts it is impossible to say. It would not be that surprising to see some delays, but they are likely to come and it is imperative that HMRC get the systems and implementation right in order to keep the adverse effects to a minimum.