Making tax digital delayed 19 Jul

An article by Nicholsons Chartered Accountants

The legislation had been billed by HM Revenue and Customs as ‘Making Tax Easier,’ but it has in fact proven to be far more difficult to convince everyone else of this than the government expected. The vision was for all tax paying businesses and individuals to have an online account with HMRC, which they updated quarterly, with a year-end adjustment, hence replacing tax returns and with one submission covering VAT, income tax and corporation tax.

Prior to the election the plans were under scrutiny by the House of Lords, with practical objections being put forward by the CLA, NFU and Treasury Select Committee amongst many others. One of the key concerns voiced was the speed and reliability of rural broadband.

The report suggests it is anticipated that approximately 3.5million businesses will be caught up by the digital plans, with 3.4million of those being classed as small or micro businesses. The cost to these businesses of adopting Making Tax Digital is estimated by HMRC to be £280, although it is noted in the document that the Federation of Small Businesses places their estimate at £2,770 per business. The adoption cost is in reality likely to depend on how much a business is prepared to undertake themselves and the choice of software.

One possible major contributor to the hold-up of the project has been the promise from HMRC that there would be basic, free software made available, but it would appear that this has been quite slow to develop.

While in essence the halt to the government’s digital plans was essential with systems being far from ready, it should not stop smaller businesses from reviewing their record keeping. With tidy records it is much easier to ensure all VAT and travel expenses are being reclaimed, and to make sure you collect in all money that is owed to you. There are also significant savings in accountancy costs that could be made with tidier records.

We are always happy to discuss bookkeeping with our clients as we know one system does not fit all and to help put a system in place that works with the way you run your business.

Since 1923 Nicholsons have been providing accountancy and business support to the rural community in Lincolnshire. While respecting the history and tradition of farming, our aim is to provide proactive advice and planning to help protect the future of the industry in our county.

Please do not hesitate to contact either Richard Grayson (richard.grayson@nicholsonsca.co.uk) or Rachel Wright (rachel.wright@nicholsonsca.co.uk) on 01522 815100 if you have anything you would wish to discuss about this article.