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The tax digital era! Latest update from HMRC

The government expects every business to keep its accounting records in a digital form.

This is  outlined in HMRC’s Youtube video below which aims to educate small business owners and the self-employed over its digital tax plans.

In the video, which involves a self-employed plumber, HMRC underlines that sole traders can now manage their tax liabilities using their smartphone.

HMRC plan is to abolish the annual tax return by 2020  have been met with concerns from small businesses that they will eventually have to publish quarterly tax returns online. This is a claim that Treasury financial secretary David Gauke has repeatedly refuted, having recently discussed the plans with Treasury Select Committee chair, Andrew Tyrie.

“Digital form” doesn’t mean an Excel spreadsheet. Each business and landlord will have to use some form of accounting software which has a capability to communicate with HMRC’s systems. We expect further details on this software requirement to be included in one of the five consultation documents on Making Tax Digital to be released shortly after the Budget on 16 March.

Lothian Accounting already supports through its partner agreements the use of cloud-based software  Freeagent and Xero which are both capable of providing detailed financial information for all types of business whether sole trader or limited company.