North East SMEs which pay their tax bills online via the Government Gateway portal will soon need to find a new way to send what they owe to the taxman.
As part of the introduction of government’s flagship Making Tax Digital initiative in April next year, businesses will no longer be able to make direct online payments to HMRC and will instead need to buy and use a software package that is compatible with the taxman’s systems.
HMRC has just published an initial list of the 45 solutions providers which have so far successfully demonstrated their prototype products, with more names expected to be added in the coming months.
And Stephen Slater, director of commercial services at RMT Accountants & Business Advisors, is urging small businesses across the region to take the announcement as an imperative for them to look at what they need to do to manage the practical impacts of Making Tax Digital on their operations if they’ve not already done so.
The arrival of Making Tax Digital (MTD) will make it compulsory for all firms with an annual turnover above £85,000 to keep and file their VAT records digitally.
Businesses will need to keep digital records of invoices, receipts and other documentation, and to use systems which allow for information to be sent digitally to HMRC on a quarterly basis.
And while a range of incentives and encouragements will be offered to businesses to come into step with the requirements of the new system, there will also be a parallel range of penalties and fines that the taxman can levy on those that don’t.
Stephen Slater says: “The arrival of Making Tax Digital is just a few short months away and it will have a huge impact on the way that the vast majority of regional businesses have to manage their finances.
“The Government Gateway provides a quick and easy way for small businesses to pay their VAT and other tax bills online, and the realisation that this option is going to be closed off is likely to bring the impact of the new tax regime into sharp focus.
“There will naturally be a cost attached to buying or subscribing to the required software packages that businesses will have to cover, while from a logistical point of view, producing and processing fully digitised documentation is likely to require an amount of extra work.
“While we’ve been speaking to our clients about the forthcoming changes for quite some time and have put dedicated resources in place to help manage any changes required, it seems that there’s a large number of other regional firms who are yet to even consider the practicalities of what it will mean for them.”
The Making Tax Digital initiative is designed to allow the taxation process to be conducted in real time by making better use of information through a single financial account, in much in the same way as online banking works.
It was originally due to be fully in place for all businesses by 2018, but implementation has been delayed twice by HM Treasury to allow for the required IT systems to be fully developed and tested.
Full digital quarterly reporting for other financial information, such as corporation and incomes taxes, is not scheduled to begin until at least 2020.
Stephen Slater continues: “We know that a wide range of organisations have been developing bespoke MTD software packages for several years and to see HMRC publish this initial list of those that have done so successfully is the clearest indication yet that there will be no more delays in the project’s launch.
“Not having the required systems in place will be no excuse for businesses that are unable to comply with the requirements of Making Tax Digital when it comes into effect, and as ever, HMRC retains an array of penalties for those that fail to meet their tax responsibilities.
“Making Tax Digital will be moving the business news agenda rapidly in the coming months and it’s purely common sense for owner/managers to be working towards putting everything in place now that they need to manage the specific impact it will have on their business operations.”
