Business owners should take steps now ahead of the April 2019 compliance deadline, writes Mel Stride MP
ANYTHING that helps businesses to manage their tax more easily so they can focus on what they do best – innovate, expand, and create jobs and profits – is what every modern business needs.
In a world where customers and suppliers are already banking, paying bills and shopping online, it makes sense for HMRC and businesses to bring tax affairs fully into the 21st century.
Being digital has already brought huge benefits to businesses, fundamentally transforming their operations and services. So why should their tax be any different?
Making Tax Digital is at the heart of HMRC’s plans to make Britain one of the most digitally-advanced tax administrations in the world.
Importantly, these changes deliver what businesses and individuals have told us they need.
Businesses have told us they want tax to be more integrated into the way they run their business, rather than something done separately, many months later. They want certainty over their tax bill, not having to wait until the end of the year, often longer, to find out how much they owe.
We have listened and created a system that addresses all these modern business needs.
Making Tax Digital, through accounting or smartphone apps, will, for the first time, create this integration.
Businesses and individuals will have 24/7 access to their digital accounts, as well as a complete view of their tax liabilities and entitlements, allowing them to send HMRC information and payments simply. They can see what each update means for their tax position throughout the year and how much tax they owe, helping them make decisions about budgeting, investing and growing.
Unnecessary delays will be eliminated as the tax system will be operating closely to ‘real time’, keeping everyone up to date, removing the risk of missed deadlines, penalties and errors being carried forward from one year to another.
Beyond helping businesses get their tax right, Making Tax Digital will help them improve and develop as targeted alerts and guidance will make them aware of entitlements and reliefs and wider government support for businesses.
By 2020, most businesses will be keeping track of their tax affairs digitally, updating HMRC at least quarterly via their digital account. But this will not mean having to fill in a full tax return quarterly.
Instead, updates will be generated from digital records and, in most cases, little or no further information will be needed. This will make it easier for businesses to get their tax right first time and keep on top of their affairs – the annual tax return will be a thing of the past.
The Making Tax Digital for VAT pilot is now open and half a million businesses can join up to use the new tools to submit their VAT returns digitally.
Making Tax Digital is part of the government’s commitment to boosting the growth of the economy.
Bringing our tax system into the digital age is right for modern business, right for modern government, right for modern Britain.
Take steps now to check what you need to do to make sure your business will be effected by the Making Tax Digital changes. Most businesses have until April 2019 to get ready before it’s compulsory to send VAT returns digitally.
• The Rt. Hon. Mel Stride is the financial secretary to the Treasury.