Is it the end of Accountants ?
HMRC expect their new initiative making tax digital will firstly raise the overall Tax take a particularly hot topic at the moment in this frenzied atmosphere of public sector cuts. Secondly it will increase tax simplification in opening up the relationship with the tax payer and finally it has the potential to improve financial management amongst the millions of self employed who might not currently keep on top of their paperwork.
The big question is will it ? and also does it mean the end of the local Accountant looking after annual tax returns for clients.
The guts of the new initiative is a new Quarterly tax submission combined with a personal tax account that incentivizes the taxpayer to communicate regularly with HMRC and shares important pension and NI information directly with the tax payer.
In addition it will be spread sheet or software based and the quarterly return will simply reflect income less expense. There will be the opportunity for monthly payment by the taxpayer and there will be an end of year correction process for allowances and errors and a period from year end of 10 months to get it all right.
So who goes when ? Over £85k sales = July 2018 first quarter, Under £85k sales = July 2019 first quarter, all VAT registered businesses = July 2019 and all Corporation tax payers = July 2020. So what could go wrong ?
This is where accountants come in. Our role may change but taxpayers and business owners will need help with changing your year end so as to delay implementation to 2019, pick a suitable spreadsheet or software package, avoid penalties, apply allowances that reduce tax and handle anyone who has multiple businesses.
So Accountants might survive in a different form beyond 2018 and hopefully we can avoid any civil unrest from unemployed accountants although at Beans we wouldn’t expect too much sympathy if we couldn’t adapt to our clients changing needs. Please call us or pop in for a coffee and we can explain more about making tax digital.