A South Wales accountancy firm has warned that the Government’s Making Tax Digital drive is likely to make life more difficult for many businesses in Wales – particularly small firms.
Making Tax Digital is a long-term plan to digitize and overhaul the UK tax system with a view to the Government making major cost savings on administration.
But the changes, say some tax experts, could be too much for businesses to cope with.
HMRC plans a series of consultations on the scheme, with plans to test the system by April 2017.
Martin Hudson, from Swansea-based chartered certified accountants Morgan Hemp says smaller firms are likely to find the system, which would require all UK businesses to keep their quarterly record keeping in a prescribed digital format, particularly onerous.
“While I understand the drive for cost-saving that is behind the Making Tax Digital drive, I fear the plan is flawed and it is of particular concern for small businesses – and at least 95 percent of businesses in Wales are SMEs.
“The system puts the onus on companies to take on quarterly reporting of their tax returns instead of just once a year. HMRC has said that this won’t mean four self-assessment deadlines instead on one, which is a relief, but it would still bring added burdens.
“If companies have to use HMRC’s designated software packages this is likely to mean costly changes for larger firms and costly implementation for some smaller firms – and for the self employed who might not be fully digitised.
“Many smaller companies are still using spread sheets to keep their accounts and it seems unlikely these would be acceptable under Making Tax Digital. I can forsee increased compliance costs on the horizon for many companies.
“As accountants we all have clients who, with the best will in the world, find it hard to collate all the data they need, or all the data their accountant needs, in order to compete an accurate tax return. It seems likely that business owners will miss an increased number of deadlines – to their cost.
“Also, while I know there have been real improvements in the roll-out of superfast broadband access to domestic premises in Wales, there is still work to do to give businesses in remote locations full and fast internet access. This will have an impact on their ability to use this new scheme efficiently.”