Don’t you just love the UK Government? UK businesses are just getting over the huge cost and upheaval from the Automatic Enrolment regime and now we have another one to deal with. You’ll love this.
They call it ‘Making Tax Digital’.
Of course we don’t yet know exactly how it works, because as you know, the Government does have a habit of changing its mind (just look at the introduction of Automatic Enrolment). Anyway, here is the essence of what they are saying:
- It is likely to apply to businesses with annual turnover above £10,000 (which is most businesses in the UK),
- Although there may be a few limited exemptions, businesses will have to use digital tools (such as QuickBooks Online or Xero for their accounting system),
- Businesses will send summary data to HM Revenue & Customs about their business each quarter (and this is why they will need to go digital),
- HM Revenue & Customs has confirmed they will not be providing their own bookkeeping/accounting software. This means you will have to sort out your own cloud accounting solution,
- It is planned to start in April 2018, which isn’t far away!
That’s a very quick overview. If you want more detail HM Revenue & Customs has published its consultation document. You can read about it here on the Governments website (although it doesn’t make very exciting reading!).
So what does this mean for you?
Very simply it means you will probably need to move your financial accounting system onto a cloud accounting system, such as QuickBooks Online or Xero.
If you’re not sure what a cloud accounting system is think of it as the difference between traditional banking and online banking.
When online banking first came in there was resistance and worry over security. Now most people use online banking. It makes our lives easier. We can transfer money far quicker than writing out cheques and posting them. We can check our bank balance whenever we need to. We can move money between accounts instantly.
A cloud accounting system has many advantages over more traditional accounting systems (manual books and records, spreadsheets and desktop systems such as Sage Line 50).
Find out about the benefits of cloud accounting
Our firm specializes in cloud accounting systems. If you would like assistance in setting up or maintaining your cloud accounting system feel free to get in touch.