Government Details Changes To Digital Tax For Small Businesses

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December 17th 2018
Week 37
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Government Details Changes To Digital Tax For Small Businesses

Six new consultations launched by HMRC detailing changes to the way the new digital Taxman intends to operate - including deferring certain obligations for small businesses.

We first heard of the Government's plans to overhaul the way tax is administered in the spring Budget in 2015. Back then a roadmap was detailed called 'Making Tax Easier' that highlighted what was in store for individual taxpayers and a roadmap was set to allow access online for for personal tax accounts by early 2016 - with a roadmap set to for businesses to gain access by 2020. This was the start of the plan to abolish the paper tax return by 2020.

Later in 2015 a roadmap was set to show how businesses will benefit from changes to their tax administration and how and when features will be introduced.

Today an amendment has been made to the roadmap and new consultations made after criticism and concern over some of the requirements of the new digital system. Concerns included the requirement for businesses to report quarterly and access issues for some businesses.

In order to address these concerns, the gradual phasing-in of the complete digital service will:

  1. Exempt landlords and businesses turning over less than £10k per year from quarterly account reporting of digital records.
  2. Defer the quarterly reporting requirement of digital records for other small businesses by one year.
  3. Exempt digitally excluded businesses from digital record keeping and quarterly reporting or offer financial support for access to apps/software etc.
  4. Simplifying payment arrangements such as the voluntary payments and repayment of any such overpayment.

1.3 million small businesses will be happy of the news that they have longer to transition into digital record keeping - this is in addition to the 1.6 million small businesses and landlords who no longer have to report digitally and quarterly at that. In total HMRC hopes half of the UK small business pool have had concerns appeased by today's consultations.

The entire 'Digital Tax System' is yet to be developed and these new consultations represent a possible setback to its availability. The features are to be phased in stages:

  • April 2018 Income Tax and National Insurance
  • April 2019 VAT
  • April 2020 Corporation Tax

Read about the original roadmap for digital tax accounts along with expected features.

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