The government’s Making Tax Digital (MTD) policy is being discussed by many businesses and MPs as small companies try to learn how to digitise their accounts quickly and easily.
This marks a huge change for companies that are used to filing their accounts manually and the learning curve could perhaps be too steep for many to adapt to, especially for smaller firms that have used the same routine for years.
HMRC believes MTD would bring business tax into the digital age, though there have been reservations from some industries, which believe that rushing the process could set back progress.
ACCA’s head of tax Chas Roy-Chowdhury explained that getting tax bills right the first time around is “clearly important”.
“Our concerns about this project have always centred on the pressures of quarterly reporting for filers, and the practicalities and cost of doing so.
“We are pleased that logistics for business have been taken into account – such as being able to use spreadsheets to record receipts and expenditure, and that for those businesses that cannot go digital will not be required to do so.”
Mr Roy-Chowdhury explained that he is pleased HMRC has called for further consideration from the government regarding initial exemption thresholds and deferring changes for small businesses.
However, he noted that he is disappointed there is no full scale deferral, particularly due to Brexit and the business uncertainty that lies ahead.
Mr Roy-Chowdhury wants to see the government to push through with a wholesale deferral to 2020 so companies can prepare for the changes.
“We also believe that SMEs need to be exempt at least to the VAT threshold at £83,000. We look forward to continuing our work with HMRC and ACCA will be giving evidence to future Treasury Select Committee hearings,” he noted.
SMEs should also be exempt to the VAT threshold of £83,000, Mr Roy-Chowdhury commented.
Tax returns prove to be challenging for small businesses that may not have the necessary money and resources to handle their accounts efficiently.
To help companies to manage their books with ease, it is advisable to hire a freelance accountant, who would be able to come in for a specific period of time and complete the work to a high standard.
If businesses do not have the time to complete their accountancy responsibilities, they could face big financial penalties and reputational damage.