SMEs at a loss in UK Gov's new plan to rush tax digitisation

SMEs at a loss in UK Gov's new plan to rush tax digitisation

Lee Murphy

owner at Pandle

Views 195

SMEs at a loss in UK Gov's new plan to rush tax digitisation

17.01.2017 10:00 am

The UK government’s call to digitise tax returns by April 2018 has faced backlash as MPs warn that the plans are being rushed through without proper preparation taking place. Improper implementation of this system will inevitably cause errors in the submissions process, which may create chaos in our tax system. HMRC tend to have weak systems in place even for systems in place for many years. Therefore a rushed system developed by HMRC will cause taxpayers, companies and HMRC lots of issues.

A survey recently found that in the last two years, 19% of those who filled in a self-assessment tax return believe they made an error or not understood the document correctly and lost out financially as a result. Such mistakes can cost 20-100% extra tax due so it’s important the government takes the time to educate individuals and businesses alike to the changes digitisation will bring.

Ideally, tax digitisation should be introduced for limited companies first, followed by individuals, instead of the other way around, which is currently planned. It would also be beneficial if another few years were added to the timescale to ensure it is implemented correctly.

Additionally, by introducing other measures first, such as the requirement for VAT submissions to be made through accounting software, businesses would have some time to get into the habit of using accounting software in preparation for tax digitisation.

At present, only around 25% of businesses use accounting software and for the government changes to see a smooth transition this number really needs to increase. If SMEs moved over to accounting software now, then by the time tax is digitised it would only be a matter of clicking a few buttons every quarter. It’s down to the government to ensure that business are prepared for these changes so that their bottom lines are not affected by small errors made online.

Latest blogs

N/A ReliaMax

College Dreams? Here’s How to Get Accepted

Higher education in the United States is not just about getting accepted, it is about where you get accepted. Sure, there are options, there are seemingly endless options - from community colleges to Ivy League schools and everything in between. The Read more »

Bobby Gill GCWealth

Bobby Gill: 3 Ways Fintech is Helping Small Businesses During the Pandemic

Image Source: Pixabay. Back in April, the US oil prices sank to a 20-year low. In the UK, road traffic levels hit a 70-year low. Worldwide, due to lockdown, retail, travel, and restaurant bookings have dropped by 85%. More than 430 million Read more »

Christa Ardley Bitstocks

Bitcoin and blockchain without the b******t

An industry once viewed by the general populace as a haven for criminals and online scammers, and still somewhat marred by fractious in-fighting, Bitcoin and blockchain are gradually casting off their outdated negative reputation; as the focus Read more »

Otabek Nuritdinov Safenetpay

Beyond Payments Services

    Why it really matters for small for medium-sized enterprise (SMEs) to choose the right payments services provider. Strategic planners in the financial services sector often define their business in terms of products that Read more »

Chak Kolli DXC Technology

How Can Insurers Realise the True Value of AI?

As Artificial Intelligence (AI) and digital transformation find their way into every aspect of our daily lives, we are gradually seeing changes taking place in different sectors. Progressively, AI is permeating the insurance value chain and it is Read more »

Magazine
ALL
Free Newsletter Sign-up
+44 (0) 208 819 32 53 +44 (0) 173 261 71 47
Download Our Mobile App
Financial It Youtube channel