Digital by Default means exactly that Everything Digital by Default

The digital road map produced with such a flourish late last year caused consternation amongst businesses and accountants everywhere not just because of its unsupported supposed cost savings but because it was the first time we had heard about quarterly reporting.

The quarterly reporting aspect was pounced upon by some who interpreted the wording as requiring 4 Tax returns a year which as we all know would digital or not be impractical to say the least. However, it allowed HMRC to concentrate the discussion on the fact that they were not requiring 4 Tax Returns a year merely 4 Reports of profits from businesses etc. The culmination of which was the release of the sensationally titled “Myth Busters” and even now months after the issue and at a meeting a couple of days ago HMRC and indeed David Gaulke both were again at pains to announce that they could guarantee that the new rules did not mean 4 Tax Returns a year.

The part of the proposals that has been completely ignored is the fact that that every taxpayer who has to report profits will have to maintain their accounting records in a digital format. I asked the Chairman of BASDA Kevin Hart whether we actually had a definition of “digital” and he say as yet there was none but we could imply that users of classic accounting packages such as Sage, Xero and the like will be covered and that at the bottom end basic record keeping apps would also be OK although interestingly there was no details available about the supposed “free” options that HMRC say unequivocally will be available.

What was agreed was that spreadsheet users and any paper or book based records would not count. Nor would it be possible for accountants to receive 3 monthly spreadsheets or 3 months records, check them and then simply enter the resultant totals into the system.

So there you have it any client/taxpayer that doesn’t use a package will have to abandon a system that they could have been using for years and be totally familiar with to learn new tricks and a complete new system.

Now any high street accountant thinking about this will immediately wonder how many of his clients will have to switch over to a new system? this despite never causing a problem and always being compliant in filing and payment deadlines. As the list grows and grows they will be wondering how and when they will have to broach this with them and explain about the real increased costs this will bring.

This is not a myth it is a fact. 

This blog is taken from the ICPA website. Dedicated to supporting and promoting the needs of the general practitioner. You can find us at www.icpa.org.uk or email [email protected] or phone 0800-074-2896.