HMRC issued 6 consultation documents in August 2016 and the consultation period has now just finished (7 November 2016). The next stage is for HMRC to review the feedback from the consultation documents on how best to setup the digital reporting of the taxpayers tax affairs.
HMRC will work with third party software developers to help develop software that the taxpayer can use to record the business transactions and documents digitally to allow them to report their income and expenditure on a quarterly basis to HMRC.
The new reporting rules will come into effect from April 2018 onwards for small businesses, there are proposed reporting exemptions for businesses with income below £10,000 but the whole process is still being worked through by HMRC at the moment.
Given that most businesses use a manual accounting system to record their business transactions or an excel spreadsheet, the impact of using digital software will be a daunting prospect to some business owners. Please contact us if you would like more information on the digital software available to help you and we can help you prepare yourself for the changes to the way you report your tax affairs to HMRC.