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Digital tax returns: what businesses need to know

Digital tax returns: what businesses need to know

At Budget 2015 ex-chancellor George Osborne unveiled the government’s strategy for transforming the way in which businesses and individuals submit their tax returns. During the speech Osborne promised a “revolutionary simplification of tax collection” via a new automated system of digitised tax accounts.

These initial remarks were scant on information. However, the government has followed up the announcement by publishing a more comprehensive strategy entitled ‘Making Tax Digital’. This document lays out the government’s vision for a fully digitised tax system by 2020, with some businesses making the transition from 2018.

Effect on businesses

  • Real time digital tax accounts
    The way that businesses interact with their tax accounts will undergo fundamental changes as the system moves towards a real time model. Businesses will be able to see an up-to-date view of the amount of tax owed and the relevant calculations. This is designed to make it easier for businesses to keep track of their tax position and lessen the administration involved with filing traditional tax returns.

  • Quarterly reporting

    Most businesses will have to make quarterly income and expenditure updates to their digital tax accounts. You will be able to use accounting software to compile the relevant data and upload it directly to your tax account. You will be able to do this across a range of devices including computers, smartphones and tablets.

  • The end of the tax return?

    The government claims that the new system will render the tax return irrelevant. How true this is remains unclear as there remains a chance that taxpayers will be able to continue using the self-assessment system after 2020.

Contact us

Still wondering how the government’s digital tax strategy will affect you? Our team can provide professional advice on the practical steps you need to take to prepare for the transition.

Contact us on 01628 631 056 or email geoffk@knightandcompany.co.uk for more information.