Think back to 2008 — the Olympics were in Beijing, Barack Obama was elected president of the United States and the UK began its digital TV switchover. This switch saw the UK’s terrestrial television converted to digital while analogue channels, broadcast from thousands of transmitter sites, were turned off. First announced in 2005 and finally completed in 2012, there was ample time to prepare for the digital TV transition. Unlike the TV switchover, the digitalisation of the UK’s tax system is fast approaching and many small businesses are rushing to be prepared.
The government announced* in 2015 that by 2020 most businesses, self-employed people and landlords will be required to keep track of and update HM Revenue and Customs (HMRC) of their tax affairs digitally.
While some business owners may rejoice in the news, after being overloaded with paperwork and often frustrating communications with HMRC over the years, for others, the transition may not be so effortless.
Keep it simple
According to research,** two-thirds of small businesses don’t use accountancy software, and 16 per cent don’t use any sort of financial record keeping at all, let alone a digital one. For this group of business owners, the transition to digital will not only be a case of learning new software systems, it will be actually keeping financial records to begin with.
Keeping useful and useable financial records when starting from scratch is easy, just keep it simple. Find a system that works for you, and stick to it ─ and if you can make these records digital, then even better. Monitoring your income and outgoings using a simple spreadsheet, or using easy-to-use software, like Tally, will make transitioning to the new HMRC systems much easier in the long run.
Speaking to an expert accountant sooner rather than later will help eliminate headaches further down the digital line. You might be a superstar of digital bookkeeping already, but full-time accountants are on the ball when it comes to HMRC changes and will be able to give the best advice for future-proofing your business accounts.
About the author: Richard Stonier is one of the founding partners of Tally and a Chartered Accountant at Deans Accountants in Stafford. He is a member of the Association of Taxation Technicians, and has over 20 years’ experience in national and regional practices. He deals with all areas of accountancy, including personal tax, inheritance tax planning, and provides special work on tax advisory and business valuations.