insideKENT Magazine Issue 57 - December 2016 | 页面 185
BUSINESS
DIGITIAL TAXATION IS COMING TO YOU
Mark Britland, a partner at Magee Gammon, looks at the recent consultation
documents issued by HMRC, “Making Tax Digital”.
H M Revenue and Customs are
intending that businesses and
individuals will start to interact with
them on a digital basis with effect
from April 2018, and that they have
a fully digital system in place by April
2020.
What does this mean for both
business and the individual?
The intention is that most
businesses, the self-employed and
landlords will need to use computers
and computer software (including
apps) to keep records and update
HMRC on a quarterly basis.
This will be a requirement for all but
the smallest unincorporated
business or landlords (defined at
present as a turnover or gross
income of less than £10,000).
The consultation proposes the
end of the tax return, the ability to
pay tax on the business activity during the year as an alternative to the
current rules.
All Tax information will be in one place, which should make it easier
to notify HMRC of any changes, so for many businesses or their advisers
there should be less contact with HMRC.
The possible introduction of a
new penalty based system, so that
financial penalties are applied only
after several failures, is relaxing the
treatment for one-off errors currently.
For the smaller business,
allowing them to account for tax
based on cash in and cash out,
rather than having to apply
accounting principles, is greatly
simp lifying the process. At present
a business may only use this
method if it has a turnover below
the VAT threshold of £83,000.
HRMC are consulting on whether
this limit should be in the region of
£100,000 to £166,000.
Businesses using the cash
basis would not have to distinguish
between capital expenditure (usually
one-off expenditure in rest of assets
for ongoing use in the business) or
revenue expenditure (day to day
expenditure often recurring), with
the exception of excluded assets
(such as property) making it easier
for businesses to determine what
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costs are allowable in calculating
taxable profits.
The consultation considers
the extension of the cash basis to
certain types of landlords, not based
on turnover, but on whether it is an
unincorporated business.
Businesses and individuals will
need over the forthcoming months,
to review accounting processes and
systems to ensure that they will be
ready for the changes.
For further information please
contact Mark Britland at
[email protected]