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The Digital Tax Account – or Making tax Digital

Source: | | 20/04/2016

The Government and HMRC have confirmed the imposition of Digital Tax Accounts for tax payers by 2020.  

What does this actually mean for our clients, who are all affected by this? There will be no self assessment tax return to complete – that will be effectively prepared through the digital tax account.  

The digital tax account will have information that HMRC holds already entered – such as payroll, P11d entries, savings interest and other reported income from third parties, such as rental payments from letting agents etc.  

As accountants and agents we do not, at present have access or are allowed access to your digital tax account. We understand that this is being resolved, how long that will be we do not know.  

For those tax payers who have income from self employment and or rental income then the goal posts on this will also change, and quite dramatically. Your profits and rental income are reported at present on an annual basis on your annual tax returns – this we are told will change – accounts and rental income/expenses will be reported, we are told, quarterly on a digital basis.   

The digital basis we are advised will not for accounts etc. be a submission of figures entered by manually typing the data into the digital tax account, but will be a transfer, upload, of data via software. HMRC advise that they will provide free software to do this, or you will be able to purchase, use, commercial third party software. For those of you who use accounting software such FreeAgent, Sage, QuickBooks, and Xero then this function is/will be supported by them.  

The data uploaded we are told can be on a transaction by transaction basis or as total figures for a quarter, quarterly reporting  we suspect will be the preferred route for most of our clients.  

Whilst not stated, this we suspect will mean that those who pay taxes on 31st January and 31st July will be inevitably required to make those payments on a quarterly basis.  

The move to digital reporting is mandatory and the excuse of, I do not understand computers or I do not have internet access, for 99.99% of tax payers  will be insufficient, the penalties for non compliance and reporting of information on or by specified dates will we would imagine result in automatic daily penalties.  

For Limited companies we await further details – but quarterly payments of corporation tax as made by larger companies being required by all companies cannot be far away.  


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ASL Accountants is the trading name of Ashton’s Secretarial Limited.   Registered No. 05599396  

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