Partner Article

Accountancy Partnership warns of looming online tax initiative

A leading accountancy firm and bookkeeping software provider is urging firms to get up speed with looming changes to how they file their accounts.

The Accountancy Partnership which operates Pandle, the cloud based bookkeeping software, says HM Revenue and Customs (HMRC) is embarking on the biggest change to the tax system in a generation with the ‘Making Tax Digital’ initiative, which is now in consultation phase (see notes to editors).

The Accountancy Partnership founder Lee Murphy said it is imperative all businesses and tax payers become familiar with filing their accounts online and start using a software package, as HMRC will not provide one.

“The MTD scheme will see digital tax accounts for all taxpayers, individuals and businesses,” he said. “Eventually, this will mean the end to the tax return. For businesses, the most significant change is the requirement for digital record keeping. This will involve the use of software or apps like Pandle to record income and expenditure, which can submit information to HMRC once every three months.”

Mr Murphy said HMRC plans to phase the new regime in over the next four years starting with the smallest businesses first.

“Self-employed and landlord businesses with turnover less than the VAT threshold will move to the digital format for the year starting 6 April 2018,” he said. “This applies if the business is the individual’s main source of income, or if it is a secondary source and the turnover is more than £10,000 per year. The self-employed, partnerships and landlord businesses who are VAT registered will join from 6 April 2019. Lastly, all companies will join from 1 April 2020. For individuals, the changes have already started to happen. Every person can register for a digital tax account with HMRC now. Eventually, it will be possible to declare all other sources of income and gains using the digital account.”

As an example Mr Murphy said for a company that currently files quarterly VAT returns and an annual corporation tax return MTD will mean that from 1 April 2020 the business will need to maintain details of its business records on an app or software which can make quarterly submissions to HMRC.

“The company should be given access to a digital tax account by 2020 which will contain all of its corporation tax, VAT, and payroll records in one place,” he said. “The company will have the option to pay all of its taxes like corporation tax and VAT in smaller more regular payments. It will also be possible to offset a refund of one type of tax against another. For other organisations like charities, HMRC would like to include them within MTD but will be holding a consultation on this first.”

Mr Murphy said earlier this year, a report by Institute of Chartered Accountants in England and Wales (ICAEW) found that 75% of businesses do not maintain their accounts electronically, or use accounting software with 41% of manufacturing and construction businesses still relying on pen and paper records.

“We’re working with HMRC and our clients now to prepare for this change,” he said. “Cloud accounting is the future and Pandle makes MTD bookkeeping simple for smaller companies. It is fundamentally different to larger software packages. Bosses, or their bookkeepers, do not need training to use it unlike with big complicated software packages. Moreover, because Pandle is cloud based it does not have to be uploaded to your computer using an old fashioned disc and then suffer compatibility problems or require lots of backups. You simply access Pandle online and most of its services are free. The key is that Pandle is designed to be a simple inexpensive way for business owners to meet their statutory digital accountancy requirements with HMRC so your company is ready for MTD.”

For further information on MTD and Pandle visit: www.Pandle.co.uk T: 020 3355 4047 E: support@pandle.co.uk Twitter: @Pandlecloud Notes to editors

This was posted in Bdaily's Members' News section by Sam Pinnington .