Will You Be Ready When Tax Goes Digital?
Completing and submitting tax returns is a necessary but incredibly time consuming process. In the UK, businesses are required to submit forms annually within strict deadlines, and face heavy fines if they are not met. It’s a complex undertaking but, to make things more streamlined, the UK Government wants to make tax digital.
This goes further than filling out assessments online, it’s a goal to do away with the annual tax return altogether with tax information sent quarterly from businesses’ accounting systems. Companies stand to gain visibility into their real-time tax situation online and save many manual hours pulling tax information together. If tax is due, through their digital account they can manage how they pay it.
For businesses used to banking and transacting online, this makes sense. They may welcome gaining more control over their taxes and saving time spent on-hold waiting to speak to HMRC (Her Majesty's Revenue and Customs) the UK Government department responsible for the collection of taxes.
Around the world, governments are taking services online to be more efficient, save costs and increase accuracy. With tax, initiatives include online tax returns and the automatic collection of relevant data from third parties, such as employers and banks, to pre-fill forms.
The Message is Clear - Manual Business Solutions Have Had Their Day
Handwritten accounting records won’t work for digital tax; spreadsheets may need supplementing with additional software to connect to HRMC’s systems. UK businesses need to prepare by adopting accounting tools that can integrate with digital tax accounts. They can register for an account during the phasing period which runs from April 2018 to April 2020.
Small businesses that embrace technology and develop digital skills equip themselves for growth in today’s digital economy. By ditching manual processes for digital ones, they can improve their own competitive position and be better able to connect externally with customers, suppliers and third party services.
Make sure to check out the second blog in the series where we’ll take a closer look at how small businesses can prepare themselves for digital tax. Stay tuned!