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Digital tax warning for business owners

Shropshire business owners must prepare now for new rules that will require them to handle all their tax affairs online.

That’s the warning from Marie Bramwell (pictured) at Dyke Yaxley Chartered Accountants, in Shrewsbury, who said many businesses were unaware of the making tax digital (MTD) initiative that would come into force in 2019.

“Almost 3,000 small businesses and landlords were surveyed for HM Revenue and Customs, and over 70% were unaware that they would need to submit quarterly updates from 2020 – another 13% had heard about the rules but said they knew nothing about them.

“The MTD project will mean most businesses and taxpayers will access their tax affairs completely online through digital accounts in future.

“And yet, so many businesses are still in the dark, so it’s vital that business owners act now to ensure they are ready in plenty of time.”

Mrs Bramwell said VAT-registered businesses with an annual turnover of more than £85,000 would be the first to submit quarterly reports to HMRC from April 2019.

“It’s likely that the VAT system will be tested from April this year, and as it stands, MTD for income tax and corporation tax will not be mandatory until April 2020, although the digital process for corporation tax looks likely to be delayed.”

She said the government research had also shown that some business owners were nervous about using digital technology and were reluctant to engage in the process.

“Around 26% of landlords and business owners said they already used software on smartphone apps for tax-related tasks such as record keeping and submitting returns to the taxman.

“But only 13% of landlords had used digital software to handle their tax affairs, with one in five admitting they were not confident enough to use the technology.

“It’s clear that there’s a lot of work that needs to be done to raise awareness of the new digital approach, and some businesses are taking part in ongoing MTD trials to ensure the smoothest possible transition.

“The fact that so many businesses don’t even know that MTD is on the way is a real concern, and we’ll be working hard to ensure our clients are fully informed of the process and the key dates they will need to meet.”

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