In our previous accounting blog we shared how the new digital tax system will affect you and your business. This week we delve a little deeper sharing how to overcome some of the challenges of the new digital tax system, and how to ensure you and your business are prepared for the change.
When do you have to implement the new digital tax system?
Government figures state that over two million small businesses already use HMRC digital accounts. However if you are a landlord or unincorporated business (sole trader, partnership or association) that earns under £10,000 you are not yet required to conform to the new digital record keeping requirements and quarterly return rules.
If you are an unincorporated business, or a landlord earning over £10,000 a year you may be able to defer a year depending on the upper earning limit (which is yet to be determined). The government is also consulting on other exemptions for other types of organisation such as charities and community sports clubs, if in doubt consult your accountant as they will be able to keep you up to date as regulations change.
What are some of the changes you can expect to see?
What are the potential challenges?
The government states that the new digital tax system will simplify the tax process. In reality as soon as small business owners are required to implement a change that’s not made-to-measure for their business it can have some negative effects on efficiency. It can be a real challenge to stay up to speed with new systems and processes alongside the day-to-day running of your business, and as soon as these changes are tied in with HMRC it is likely to cause unnecessary stress.
How do you stay one step ahead of the game?
With a number of speculations regarding the exact workings of the new digital tax system it’s easy to get caught up in worries that something will catch you off guard or mess up your fine-tuned accounting process completely. It is in this transition phase that it is valuable to have a trusted (and unflappable) accountant by your side to guide you through the transition. Here are our top tips to avoid any problems:
Once the initial challenges of the digital tax implementation are over the new system is likely to be highly beneficial for business owners. It can provide you will up to date management information through the year, thus helping you make sound business decisions and manage your cashflow.
Please remember to get support from your accountant. The data you enter is how HMRC will understand the inner workings of your business, so you want to make sure it is an accurate reflection of what is going on rather than a haphazard collection of figures. If you need any support or guidance please contact email@example.com or call 01243 532490.
This blog was written by Monica Jervis, small business owner, founder of the Chichester Accountants and qualified accountant. If you’ve got any questions don’t hesitate to get in contact on Twitter, Facebook or Google+.
Tel: 01243 532 490
Professional Indemnity Insurers:
Hiscox Ltd Policy Ref:CHICIOWQ01
Territorial coverage is Worldwide excluding claims brought in USA/Canada.
Forum House, Stirling Road, Chichester, West Sussex, England, PO19 7DN
Company No: 07327325