By Phil Moss, Tax Partner and Alex Fish, Tax Group
While there’s no immediate danger, HMRC is planning on creating a digital way of working, referred to by them as “Making Tax Digital”.
The scheduled start date is April 2018. Although seems a way off, it’s important to be aware and to be ready. You may however be relieved to know that no action is required by you just yet.
One of the key changes is the abolition of the annual Self Assessment tax return which is being replaced with real-time quarterly filing.
The proposed changes will have the greatest effect on unincorporated businesses and landlords who will need to post their accounts information electronically, on a quarterly basis, using HMRC approved software. This information will feed directly to their HMRC account.
HMRC will also gather other information such as P60, bank interest etc., and populate your digital account with data. In theory this should mean that we no longer have to provide HMRC with information that they already have.
The digital account will, of course, need to be checked for errors and there will be some aspects of our clients’ tax and financial affairs that HMRC do not have access to – capital gains, for example, or changes in residence. HMRC has announced that they will release further details on Making Tax Digital during January 2017.
As “agents” we will also have access to your information and will liaise with you to ensure the information is accurate as well as adding any additional information as required. Just as we now do with your annual self assessment returns, we will ensure your quarterly returns are submitted once you have approved them.
This will obviously be a major change in the way information is currently collated and submitted to HMRC and will require us to interact more regularly with some of our clients.
We are working closely with both HMRC and our software providers in order to advise you in good time what, if any, changes you will need to implement.
We will be keeping you updated by email, blogs and articles in Fine Lines. However if you have any immediate questions on this subject please feel free to contact either our tax partner Phil Moss firstname.lastname@example.org or Alex Fish in our tax group, email@example.com.