taxation A digital revolution for accounting


The Government’s proposed digital revolution will transform the way that many businesses maintain their accounting records, writes Andrew Kershaw, associate director of HWB, who takes a closer look at the ‘Making Tax Digital’ project


Making Tax Digital (MTD) is an ambitious initiative by HM Revenue and Customs to modernise the UK tax system by 2020 through enhanced use of digital data, with the ultimate aim of becoming the most efficient tax authority in the world.


What does this mean for businesses?


Under the proposals every business and individual will have a digital tax account, bringing together each taxpayer’s details in one place. A lot of information will be automatically uploaded to the account by banks, pension providers and government departments. The proposals will also require most businesses to submit financial information to HMRC on a quarterly basis.


By 2020 it is proposed that most businesses, including companies, partnerships and individual tax payers who are self-employed and some that are letting out property, will be required to use software or apps that are capable of submitting details of their income and expenses digitally to HMRC. After a period of consultation the Government has indicated that businesses currently using spreadsheets to record their transactions can continue to do so, but will likely need additional software to generate and send updates to HMRC.


The Treasury has said that the switch to digital will make lives easier for businesses, but it will require many to change their current accounting systems and


processes to ensure that the new quarterly reporting requirements will be possible.


While this will mean having to prepare accounts more regularly, by reporting information closer to real time, businesses should in theory find it easier to understand how much tax they owe, eliminating any uncertainty over figures and helping them to budget accordingly.


HMRC will complete a year- long pilot of the digital systems, beginning April this year to make sure software is user friendly, and to give businesses and landlords time to adapt. Final dates for implementation will be announced before legislation is introduced later this year.


At HWB we have extensive


knowledge of online accounts packages and are currently working with our business clients to ensure a smooth transition to the digital revolution.


Our full-service accountancy practice offers a wide range of advisory services including strategic business and financial planning, audit services, payroll, corporate finance, IT and taxation.


To find out more about accounting software and how it can help your business see details below.


Andrew Kershaw 023 8046 1201 andykershaw@hwb-


accountants.com


RSM warns on rates and wages impact


Uplifts in the National Living Wage combined with the effects of new business rates from April 1 could spring a nasty surprise for many retailers and restaurants in the South East, RSM has warned.


The Institute of Directors has called for further rate relief for businesses based in properties worth up to £100,000, in addition to a special commission to tackle tax anomalies between high-street shops and the online giants.


Commenting on the challenges which lie ahead for the high street, Damian Webb, a restructuring advisory partner at RSM, said: “Many higher-value, labour-intensive retail and leisure operators will see an exponential increase in their fixed cost base from April 1, 2017. High-street businesses in London and the South East are likely to be particularly badly hit as two of their key costs – business rates and salaries – look set to


rise. Coming at a time when exchange rate pressure is raising prices and squeezing consumer budgets, some retailers could be in for a very tough time indeed.


“Napoleon contemptuously referred to England as a ‘nation of shopkeepers’ but the high- street makes a vital contribution to the UK economy and to local communities. Since the recession of the late noughties there has been a renaissance in the high street, driven by the emergence of smaller independent retailers and the growth of leisure operators.


“However, trading on the high street is becoming much more difficult. Success is being driven by the innovation and diligence of operators rather than any improvement in the structural issues which have undermined the sector since the emergence of online trading.


“Due to the depreciation of THE BUSINESS MAGAZINE – SOLENT & SOUTH COAST – MARCH/APRIL 2017


sterling, retailers will see a gradual increase in their stock- buying costs during 2017. Against a competitive backdrop it is difficult to see how far these costs can be passed on fully to consumers, which will likely lead to a decline in margins.


“Supportive funders, landlords and government initiatives should help soften the blow, but in some cases it may be necessary for retailers to consider other options such as financial and operational restructuring tools which focus on aligning costs with current trading and performance.


“Many retailers are resilient and innovative and will take the necessary steps. But importantly, those who are struggling shouldn’t bury their heads in the sand. Tackling the issue head-on is a much more effective way of ensuring long term sustainability.”


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