A Fylde coast accountant is warning small firms to get set for next year’s tax tumult or face penalty points like a dodgy drivers might get.
Hot on the heels of the paperwork which was created by the implementation of GDPR, Jones Harris Chartered Accountants at Fleetwood is warning businesses that an even bigger change is on the horizon with HMRC’s introduction of Making Tax Digital.
Making Tax Digital has been described as the biggest shake-up to the taxation system since Self-Assessment was introduced more than 20 years ago.
It requires all businesses to submit summarised accounts to HMRC on a quarterly basis and becomes effective for VAT registered businesses from April 2019. No
n-VAT registered businesses will be phased in next and the roll out completed by 2020.
The data will be collected through VAT returns, requiring your accounts to have been completed electronically.
The HMRC website states that record keeping should be “generated and sent direct from the software the business/agent uses to keep their records”.
This will be a big step change for many small businesses.
Jones Harris director Stewart Case said: “We’ve embraced technology here at Jones Harris and operated a paperless office for many years.
“Now, businesses which haven’t already done so will have to move to an electronic method of bookkeeping, and are advised to use a propriety software package.
“We do know that many smaller businesses throughout the UK will struggle with MTD when they have to implement it themselves.“Wi
th only months to go to the beginning of the new tax year, it’s something that all businesses should take seriously right now, especially since a new points-based system of penalties will be introduced to deal with late filing breaches.”
HMRC has published draft clauses that will form the basis of the Budget later this year, outlining a significant change to the way they will be levying penalties, with a new points based tax system.
In a very similar system to that operated for driving offences, you will receive a penalty point per event, and when the penalties reach a certain number you’ll be required to pay a fixed penalty fine.
HMRC is also considering introducing an amended penalty for deliberately withholding information.