HMRC’s digital crusade continues unabated, with the news that the government expects every business to keep its accounting records in a digital form.
This key requirement will under-pin Making Tax Digital (MTD), as was made clear in the MTD for business event held on 3 March. What’s more “digital form” doesn’t mean an Excel spreadsheet. Each business and landlord will have to use some form of accounting software which has a capability to communicate with HMRC’s systems. We expect further details on this software requirement to be included in one of the five consultation documents on MTD to be released shortly after the Budget.
However, moving to a commercial software package will mean extra costs and data transfer problems for many businesses who have created their own bespoke accounting software, or who rely on Excel spreadsheets
This will be a huge step for those who have yet to take the step into cloud based accounting.
HMRC has assumed that every business will seamlessly transfer a summary of accounting data from their accounting software to HMRC each quarter. They are releasing a free app to enter income and expenses on the go but there is the worry of how accurate this data will be and if the expenses entered are even allowable. This is especially of concern as HMRC have re-iterated that the renamed ‘Your tax account for business’ (YTA) will not be available for tax agents to see or use.
We will be monitoring the implementation of this system and will post future news here. Meanwhile if you have any concerns please contact us.
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