The smallest businesses will be exempt from quarterly reporting to HMRC, government proposals about the transition to digital tax accounts have revealed.
The 6 consultation papers detail plans to allow the majority of businesses, self-employed people and landlords to manage their tax affairs digitally by 2020.
Businesses will be required to submit quarterly updates to HMRC as part of the new system. These updates will only need to contain summary data.
Currently, 98% of corporation tax returns and 99% of VAT returns are submitted online.
The main proposals:
- unincorporated businesses and landlords with an annual turnover or gross income of less than £10,000 will be exempt from the quarterly updates and digital record-keeping requirements
- the current £83,000 threshold for cash basis accounting will be raised
- digital tax accounts will provide users with prompts and alerts to help them avoid non-compliance and to take advantage of the full range of tax reliefs open to them.
Small businesses should already be able to access their digital tax account.
Nigel Holland from Holland & Co Chartered Accountants said:
“I agree with the idea of the HMRC exempting small businesses from its latest proposals in its drive for digital tax accounts. This will reduce red tape which is a large expense for many businesses.
HMRC are in moving with the times, more and more businesses in various sectors are more frequently relying on digital technology and formats. Smaller businesses may lack the expertise and funds to adopt to the big changes.”
Talk to us today to discuss your transition to digital tax accounts.