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@TheBusJourney #SMEJourney
Ian McMonagle
Chartered AccountantsChartered Tax Advisers
Business Development Specialists
Adapting to change:
Digital Tax accounts
The most significant single change affecting individuals and small businesses in the history of our income tax system
“During this Parliament, HMRC will make fundamental changes to the way the tax system works — transforming tax administration so it is more effective, more efficient, and easier for taxpayers.” David Gauke MP Financial Secretary to the Treasury
“Much more than simply adding digital tools to the current system; it is about transforming the UK tax system”
- David Gauke MPFinancial Secretary to the
Treasury
• 50 million individuals will have their own Digital Tax Accounts
• Pre-populated by HMRC• Everything in the one place,
including Child Benefits, State Pension forecasts, tax paid
• All taxation will switch to online communication
• 4 quarterly “updates” will be required each year
• From April 2018, all small, non-VAT registered businesses and landlords must comply with the new digital reporting rules
• From 2020 this will apply to all businesses, including companies
• Mandatory digital record-keeping
• Quarterly returns(?) - similar to VAT or RTI/PAYE systems
• Online billing, aligning payments with profits made (Pay as you go)
• Tax potentially payable monthly, quarterly or by Direct Debit
• ‘Real-time’ • HMRC access to bank accounts?
‘Single Business Service’
Don’t believe the Government spin
Case study:Self-employed; sole-traderSporadic turnoverNot VAT-registeredNo employeesPoor record-keeping
Case study: Self-employed; sole-traderLarge turnoverVAT-registeredHas a number of employeesBoxes of receipts & invoices
Case study: Director & ShareholderSalaryCompany dividendsBank interestReceives Child BenefitsPays personal pension contributions
Case study: Landlord2 Furnished properties£500 per month gross rents x 2Buy-to let loansJoint title
Bookkeeping survey of 500 businesses across the UK:• 25% use software currently• 25% use a paper-only system• The rest employ a mixture of both or
use packages such as Excel
• ‘Quarterly tax reporting a threat to small businesses’• ‘Small firms will struggle with new quarterly
tax returns’• ‘This should be a voluntary scheme for small
businesses’• ‘HMRC should undertake an impact
assessment and consultation exercise’
‘Should be a matter of choice and should not be made mandatory’
‘Businesses should be able to move to digital over time’
Your call to action:• Ditch the bad habits• Adopt good practices• Bookkeeping• Embrace software• Change now
Thank you for listening
@TheBusJourney #SMEJourney
Ian McMonagle Questions?
@TheBusJourney #SMEJourney
The Business JourneyThank you for your attendance. Next event30 August 2016