Digital taxation is coming. There have been comments made both in parliament and in the press about digital taxation. The government are quite enthusiastic about this as they see it as a way to get funds into the treasury much quicker and also as a cost cutting exercise in the civil service.
Whilst some commentators have said it is just an idea that will probably not be put into practice but those close to the government have indicated this new system WILL be introduced the only question is when.
Digital taxation will involve taxpayers, either by themselves or through their agents using digital technology to report details of their transactions to H M Revenue & Customs more frequently, possibly quarterly. It is expected that by submitting information to H M Revenue & Customs more frequently, they will be asking for the tax more frequently. This process will impose increasing burdens on tax payers both in terms of the timing of the reporting of information as well as in cash flow terms.
Full details are yet to be published of the precise reporting requirements and how they will cope with the year end adjustments that we normally process before finalising accounts and indeed what technology will be used (this could involve the traditional desk top or lap top or even the use of mobile phone apps) and as matters develop we will of course keep you up to date.
As the government is adamant the system will be introduced. Whilst the original proposal is for implementation by 2020 (quite an optimistic forecast) it is important that business gears itself up for implementation and over the next few years we will make suggestions regarding record keeping to meet the statutory requirement as and when they are known.
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