Category: Company finances

Making Tax Digital

making tax digital

making tax digitalHow Will New Tax Accounting Processes Affect Individuals and Small Businesses?

In 2015, the UK Government announced plans to introduce online reporting processes for taxpayers. What does this mean for businesses and individuals?

In the March 2015 budget, the Government announced a £1.3 billion programme that would revolutionise tax reporting. The five-year plan will introduce online accounts through which taxpayers can interact directly with HMRC.

The new system envisages quarterly updates that will effectively signal the end of the tax return as we know it.

As with any major change in financial reporting, the rules and timelines are still being finalised, but the current deadline for digital records is April 2018.

The change might seem daunting, particularly for the thousands of small business owners and self-employed entrepreneurs in the area, who should consider taking advice from their local tax accountants in Peterborough while there is still enough time to get prepared.

Making tax easier

In December 2015, HMRC published a document (.pdf) that fleshed out the Government’s budget announcement. In his foreword, David Gauke, the Chief Secretary to the Treasury, heralded digital tax as part of Whitehall’s “digital revolution” stating that it would “transform the experience of millions of taxpayers” by introducing a system that is easier, more efficient and more effective.

The document also set out a timeline for implementation. Like any major project, we can expect some dates to be fluid, and a detailed consultation that was originally scheduled for spring 2016 was the first to be pushed back while ministers waited to see the results of the EU Referendum.

Nevertheless, the April 2018 deadline for the first online submissions remains in place.

Impact on individuals and businesses

The Government has published a series of case studies detailing how digital tax can affect a cross-section of individuals, including landlords, pensioners and small business owners.

The case studies certainly point towards a much easier and less frustrating system than the current method of tax reporting. Using smartphone apps to regularly update pre-populated data fields looks far less onerous than the task of manually filling out pages of information once a year. But can it really be that easy?

The right technological tools

Research by the Institute of Chartered Accountants in England and Wales (ICAEW) suggests that many small and medium sized enterprises are not currently in a position to meet the 2018 reporting rules.

In its paper “Digitalisation of Tax, International Perspectives,” the ICAEW analysed similar projects in other countries around the globe. It found that digital exclusion is the biggest obstacle to full implementation of such programmes.

Businesses below the VAT registration threshold are particularly at risk in this respect, as these businesses are unlikely to have existing bookkeeping software. Indeed, an ICAEW survey earlier this year revealed that only 25% of UK businesses maintain electronic accounting records.

Be prepared

The good news is that for businesses and individuals alike, there is still time to get fully prepared for this aspect of the digital revolution.

In the long run, putting tax accounts online should make tax reporting quicker, easier and more accurate for everybody. Get the right advice and support to make sure it represents a positive change for you and your business.

5 Questions to Ask Your New Company Accountant

The accountant is a very important part of every company out there. If you want to hire the best one for yours, then you need to ask some questions which will show you if he’s worthy or not. These questions will bring you a clear image on who you are about to work with. And if you want to make your company successful, then you need to be very careful with this matter, and today on this article we are going to solve this for you, and bring you 5 powerful questions which will allow you to hire the best accountant for your company.

How Can I Contact You?

As we have said before, your account is a very important part of your company. So you need to have an easy way to contact him at any given time. You need to ask him what the best time to contact him is. Ask him to give you his or her email, along with a phone, cellphone and even a whatsapp number. You need to have many ways to communicate with your accountant, because there are many problems that can appear in the middle of the road, and you will need to contact him as soon as possible.

Can You Help Me With Tax Season?

Tax season can be quite a headache, so you need to ask him if he can help you to go through it, after all he’s the professional in the financial world. You need to talk about this with him seriously, because you can save a lot of money with proper assistance, and you must make sure that your accountant will be able to do it. Ask him how he can help you, so you can see if he’s saying the truth or lying.

How Can You Help My Business Grow?

Every person you hire for your company must add some value. And that includes your accountant. Cut off the fluff and ask him directly this question. If he responds very well, then he may be a good pick, because he knows what his worth is, and what his abilities are and how they can help your business grow. And this is excellent, because it means you are working with someone who really knows what he’s doing.

Can You Determine The Value of my Company?

Your accountant should be able to do this, because it’s part of his skills set. It’s also a nice question to set the pretenders out of the real deals. If he responds that he can, and explains you how he will do it, then he may be the accountant you are looking for.

Can You Give Me a Hand With Business Contracts?

Your account is your business partner, so more than once you will need his help with business contracts, you need to have him near and know that you can count on him. Ask him this and let yourself know if he’s someone you can rely on.