Small businesses to benefit from “Making Tax Digital”
Paying tax should become less burdensome for British businesses under plans for a new tax system set out by HMRC. Six consultation documents which seek views on its Making Tax Digital programme have been unveiled setting out the benefits as follows:
- cash-basis accounting so that thousands more will be able to pay tax based simply on the difference between money they have taken in and what they have paid out, meaning tradesmen will pay tax on cash received rather than invoices issued
- prompts and alerts to help businesses get tax right and giving advice on tax reliefs they might be missing out on
- greater certainty over tax bills so businesses don’t have to wait until the end of the year to find out how much they have to pay
In addition, the smallest firms and landlords will be exempt from digital record-keeping and quarterly updates – the Government is also considering deferring digital record-keeping and quarterly updating for a further group of small businesses and says it will explore options to assist businesses with the transition.
The consultation documents also confirm that those who cannot go digital will not be required to do so.
Mike Cherry, national chairman of the Federation of Small Businesses, comments: “Removing small firms and the self-employed with modest turnovers altogether from the proposals will now mean that in addition to the 1.6 million small businesses and landlords that were already excluded … a further 1.3 million small firms and landlords will no longer be in scope. This means that half of the UK’s 5.4 million small businesses will not be affected by quarterly tax reporting. The expansion of cash accounting, a longer lead-in time for implementation and the offer of direct financial assistance will also help.”