HMRC to trial Making Tax Digital system for selected businesses
Certain businesses and other customers will be invited by HMRC to trial aspects of the Making Tax Digital project, to ensure it runs smoothly.
The project will requires firms to use software that is compatible with HMRC’s existing systems for filing quarterly updates.
The move is an attempt to reduce errors with tax returns, many of which HMRC believes can be avoided – such errors are believed to cost in the region of £8 billion a year.
As part of an initial trial, HMRC has said it will allow a selected set of companies to use software to record and send reports to them.
The pilot is set to reveal how easy it will be for businesses to file their returns, by highlighting the compatibility of software and other existing technology.
A list of software developers that have compatible software is due to be released later in 2017, although a date for it is yet to be confirmed.
Making Tax Digital’s programme manager Theresa Middleton has also stressed that all suppliers will have products ready when the project goes live in April 2018.
The aim is to have a fully digitalised tax system by 2020 whereby the need for form-filling is eradicated on the basis that the system will have a lot of key information stored.
Using an online system should make it easier for businesses to hit deadlines, thus avoiding potential financial penalties, debts and other issues that could be carried on from one year to the next.
A range of other services also exist that can aid small businesses in their dealings with HMRC, especially for companies experiencing VAT and PAYE arrears or issues surrounding unpaid tax. Speaking to an advisor early can help in arranging a time to pay agreement with HMRC.
By Phil Smith