I am writing this blog purely to bring across my own views about the forthcoming changes to the way the Revenue deals with our tax affairs.
By early 2016 millions of people should be able to access their personal tax accounts via the HM Revenue website and their Gateway accounts. If you are one of them then you will be able to see details of what you currently owe in tax, Paye and more.
I am a strong believer that changes are inevitable and that the future will be a more digitalised system, the next generation surely won’t disagree. I am also in favour of a more centralizing database where the Revenue is able to collate information provided by our employers or else themselves rather than fobbing us off to different departments.
My concern is, how will the average person running a small business deal with those changes. Will it be necessary to invest in accounting software as the Revenue quotes:
“Their accounting software will be able to feed data straight into their digital tax account, so most businesses will simply log-in to check their details with no need to send an annual return.”
I believe that in years to come the majority of small businesses will find it beneficial to use accounting software and I know that there is a lot of development going on in the industry to keep on top of changes in the tax system, even though I struggle to find anyone who has a clear idea of how to implement these changes or to even know what they will be. It simply is a waiting game at the moment.
I spoke to the Revenue only this week regarding this issues surrounding accounting software and how they envisage to implement this.
The answer I got was as expectedly vague and non committing, according to them data will not be drawn directly from the software but rather to be submitted separately, similar to Vat return filing at present. I do agree that the abolition of a tax return shouldn’t be too much of a headache for the normal taxpayer, who I’m assuming is capable of dealing with their own affairs and will simply comply with adding quarterly details of income and expenditure.
But what if there is a dispute over human error for people choosing to use accounting software, will there be an automatic investigation? What about seasonal businesses or people who still pay things by cheque?
I do worry that some might find this too daunting to deal with and my personal advise would be to find help before penalties hit home as I know that the £100 late filing penalty in place at present will soon feel like a drop in the ocean as quarterly returns will come with much steeper quarterly fines.
Cloud based accounting software is in my honest opinion the way forward and will become more and more used by small and large businesses due to the need to be digital. The banks will have to agree on a standard platform for data exchange which the online accounting software providers will have to agree on.
The devil is definitely in the detail and the sceptical eye of the accounting world is crucial in implementing these changes. Times move on and so should we.
This all will not come without its costs to anyone required to file returns and there will always be some people not able to file online due to finance, disability, religion, lack of equipment or broadband. But one thing I am sure about is that this is the course the Revenue is taking, a leap to modernise the tax system keeping Britain the financial hub of the world.
Keep an eye out for my next blog on cloud based accounting softwares, the Pros and Cons.