Small business boost as government delays Making Tax Digital
The Government has pushed back on proposals for its Making Tax Digital scheme, meaning small businesses have more time to prepare.
While the original target was for businesses to file quarterly accounts and to be digital by 2018, those turning over less than £85,000 annually will only need to submit yearly.
The initiative will provide a boost for small businesses as they will not need to spend as much time on their finances.
Only those businesses that earn beyond the VAT threshold will need to have digital records and that will only be the case from 2019.
Quarterly updates meanwhile will not come into force until at least 2020, meaning they have a minimum of two years to prepare for digital record keeping for taxes.
Following concerns over the pace and scope of the tax reforms, Mel Stride, the Financial Secretary to the Treasury, revealed that the target is to “bring the tax system into a digital age in a way that is right for all businesses”.
Making Tax Digital aims to cut the tax gap in the UK that results from avoidable errors in tax processes – estimated at around £8 billion annually.
The Government has noted that many businesses are already using online services for banking and payroll and wants to ensure a seamless transition to digital.
An estimated three million businesses will no longer need to have digital records by 2018, although efforts are still being made to ensure the process of digitalisation is completed as soon as possible.
Since the plans were first announced, a number of businesses have voiced concerns over the time that will be required to implement the new systems.
Businesses can face issues with VAT, PAYE and tax should they face unexpected events or other unforeseen circumstances where they are left unable to fulfil their financial obligations.
Support from financial specialists can provide assistance in such instances, from tackling winding up petitions and unfair penalties to forming HMRC Time to Pay schemes.
By Phil Smith