For the first time, businesses will be able to see, through their digital accounts, a real-time view of their tax and a calculation of the tax due. Going digital will abolish the annual tax return as we know it, replacing it with a personalised digital service through which taxpayers will be able to send and receive information to HMRC at the click of a button.
From April 2018, the self-employed, landlords and partnerships will need to use online accounting software to record income and expenses and every quarter will be required to submit a summary of that information to HMRC online. Paper records and spreadsheets will no longer be enough. In addition to the quarterly submissions an end of period statement showing any accounting adjustments is required. The deadline for this will be the earlier of either 10 months after the accounting period end or the next 31 January.
There will also be a final declaration making a total of 6 submissions per year.
It is worth noting that there is a separate requirement for each trade or business; therefore, a self-employed individual who also has some rental income must submit a set of quarterly updates for their self-employed trade, and another set of quarterly updates for their lettings business.
Please contact me any time if you would like to discuss these changes, how to deal with more frequent record keeping and reporting obligations and moving to a digital accounting system.