The new system of tax management being introduced by HMRC is aimed at making the process of tax collection easier and more efficient. By using digital devices such as smart phones and computers, small business owners are able to properly itemize their transactions and plan for the tax return at the end of the year.
Free compatible apps and software will be made available when the change takes effect from April 2018 and Landlords and small business owners will have to incorporate the new system where they catalogue their invoices and receipts while providing HMRC with quarterly updates to their company financials.
The idea will be to try and cut out the vast swathes of physical mail that has to be sent out by HMRC to individual businesses across the country. The move will see a reduction in instances of documents getting lost in the post and reduce the environmental impact that is required to write up tax documents for those who are eligible to pay.
How does it work?
Initially there was a lot of outcry over the proposed idea of a quarterly tax return system with the petition to scrap the idea gathering about 100,000 votes from the public and debated in the parliament. However the former chancellor of Her Majesty’s Exchequer had said that was a misunderstanding as the change only required quarterly tax updates to HMRC but not quarterly tax returns. This actually serves to make the eventual annual report a little bit more comprehensive while cutting down a sizable amount of red tape for the folks at HMRC.
The transition of tax returns to digital platforms aspires to make the yearly duress of filing paperwork of transactional history a lot less tasking on the Landlords, ensuring that it is possible to update your digital tax account in real time as transactions are ongoing. The UK government also had an article published detailing what to expect with the new digital taxing system and how to utilize the resources they would be putting out along with it.
Is this necessary?
Many speculate that the move being made does not have the business owners at heart as much as it claims to, as this will also help to cut down operational costs for HMRC which they have been trying to do for a while now. Even If this may be true, the new system does make the tax return process a little less tasking for the business owner. There are even clauses exempting select demographics of these taxpayers from mandatory quarterly updates which go to show that even on some level, there is also consideration for the taxpayers.
However with landlords dealing with a market rife with risk and liability, they need to know that they aren’t only covered by their market strategy and landlord insurance but by government policy itself, and whether or not this helps or hinders the life of the hardworking landlord in the long run is yet to be seen at least until the year 2019.
The key move is that the process of taxation is being modernized, which will ensure the government doesn’t miss out on any money or contributions that it is owed from its citizens.