Posted on 17 November 2016
Digital channels are taking over. We are now online shopping, booking holidays and communicating online more than ever and filing tax returns is soon to be added to the list of things we have to do digitally.
Making Tax Digital (MTD), the initiative by HMRC seeks to move away from an annual tax return in favour of quarterly information reports to HMRC. The aim is to make the process far simpler for taxpayers, accountants and HMRC themselves, whilst also providing more accurate information for HMRC.
It is anticipated by asking taxpayers to provide copies of their business records directly to HMRC via apps on Smartphones, etc. the data quality will be improved, alongside providing an easier process for calculating an individual’s tax liability.
A representative of HMRC has stated that through the use of MTD, they will be paying greater attention to ‘big data’ (the term applied to the large amounts of data that inundates businesses and individuals on a day to day basis, that is generally analysed computationally) as a source for carrying out tax enquiries. It is expected that the use of such data will increase substantially over the next few years as HMRC continue to identify those individuals and businesses that are underpaying tax.
Whilst the intention of MTD is not to increase the number of tax enquiries, it is a method of ensuring that correct and appropriate cases are investigated. HMRC will also use their Connect tool to assist them to provide a more accurate method of assessment.
In order to guarantee your tax return is filled out correctly, especially with the diminished margin for error with the online system, it is advisable you seek professional advice. If you need tax advice please contact our Tax Team.