Tax to the future
13th March 2017 by Jonathan Wingfield
As a firm, Ensors has been looking into how the future of accounts and tax is
changing. Although we are aware of aspects individually it is only when you do
this type of exercise that you draw together a picture of how much change is
So what is coming - well so far we have seen the change to online filing for
VAT, Tax Returns and now wages information is being submitted to HM Revenue
& Customs on a weekly/monthly basis via Real Time submissions and again this
is online. Anyone with employees is also facing pension auto enrolment - the
various options and routes for this have resulted in payroll software being an
invaluable tool to guide and assist employers. In our firm we have encouraged
clients to utilise accounting software and computers as we can then extract data
and analyse this more efficiently and therefore save the client money. This
allows us to focus more on important issues such as tax planning instead of
completing simple tasks.
The trend behind all of this, as everyone gets more computer literate, is to
use computers and software to make us more efficient and allow data to be
analysed quicker and produce helpful information sooner to aid decision making.
As we are becoming more connected this data is linking with other software and
businesses to integrate and collaborate, giving real time information. This is
the same for HMRC. They are short of staffing resource and under pressure to
ensure everyone is paying the correct amount of tax. They are turning to
computers and software to push work down to us, whilst analysing the data they
receive through software. This influences how they want data and when. So where
is it going?
Well you may have heard the term 'Making Tax Digital' (MTD), a big initiative
by HMRC where in addition to the normal Tax Return/VAT Return etc. you will
provide business accounts information on a regular basis to HMRC, via online
submissions. Basically quarterly accounts that HMRC can review to provide an
indication of your expected tax bill for the year, which eventually you can pay
upfront! This also adds a layer of checking that does not currently exist as you
will be providing more information, earlier and regularly.
HMRC are looking to work smarter and utilise what resources they have, so we
must do the same to ensure we keep up. This will mean doing more than we
currently are, focusing on using tools such as software, phone apps and your
accountant to prepare for these changes. MTD will be coming from April 2018 (if
all goes to plan!) starting with the unincorporated businesses first. This is
all still being refined and adjusted but the basic principles of what they are
looking to achieve are set.
One point to end on is a change that is already in place but you may not be
aware of. Every individual taxpayer will now have a 'Digital account' which is
where HMRC collate data about you and give you access to check it. Ultimately
the goal is that everything is collated by HMRC, you check this account and if
you are happy you agree it and that’s it, all done. You have agreed your tax and
you are sent a tax bill, no need to do a Tax Return! This will start with simple
cases first but again the basic principles are there, more emphasis on
computers, using data efficiently and quickly to remove errors and tax
The future of tax is changing...
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