Tuesday 29 March, Research by ICAEW of UK businesses has revealed that 75% do not currently maintain their accounts electronically using accounting software. Ahead of proposed changes by Government to file accounts online, businesses will need to consider what changes they need to make as well as the costs that they will incur to comply with the new rules.
From April 2018, small, non-VAT registered businesses will be the first UK businesses to have to comply with Government’s new proposals for Making Digital, first announced by the Chancellor in the 2015 Budget. The change will make digital record keeping compulsory in addition to a new requirement to make four returns of information to HMRC each year. By 2020 this will apply to all businesses.
The research found that a greater burden will fall on sole traders with 82% of one person businesses needing to make the move to digital record keeping. Most of the burden will fall on those in the manufacturing and construction industries where 41% still rely on paper based records. Of those surveyed over half (55%) support the general move by HMRC to encourage businesses to send in their information online but only 18% felt it should be made compulsory – which is currently proposed.
Paul Aplin, Chairman of ICAEW Technical Committee, said:
“We fully support HMRC’s ambition to increase the use of digital technology to make meeting tax obligations more straightforward. These changes should however be a matter of choice for business owners and should not be made mandatory. Businesses should be able move to the new system over time when they are ready. Government claims that these proposals will contribute to reducing business tax compliance costs by £400 million, but we fear that many small businesses will in fact face additional costs when digital record keeping is made mandatory.”
The Government has yet to provide detail on ‘Making Tax Digital’ and how it would work in practice.
Please direct all media inquiries related to this article to:
Natalie de Freitas - Media Relations Specialist
Tel: +44 (0)20 7920 8668