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Being in business is not about how much tax you have or have not to pay

9th Dec 2016
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ICPA is a professional organisation for accountants in practice.

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When people start out in business the first thought that comes into their heads is not how much tax they are going to pay. Undoubtedly at some juncture the spectre of taxation will raise its head but at the outset profitability and sustainability and possibly longevity are at the forefront of fledgling businessmen and women’s minds.

Established businesses consider the taxation consequences of their decisions because at the present rate taxation is not cheap and where staff are concerned the additional costs in terms of National Insurance can be significant and can significantly effect how the business will perform.
With this in mind businesses set up systems that they hope will give them what they need to make the fast and informative decisions. 

To put it bluntly they don’t set up their systems solely with HMRC in mind. I don’t think any accountant in practice has helped a client design a record keeping system with HMRC at the forefront of their thoughts and as the business develops the system are amended, improved and overhauled as the circumstances dictate. To my knowledge what the taxman wants has never been a driving factor to change the record keeping systems.

To me and to all ICPA members this sums up the core of what is wrong with the Making Tax Digital proposals, namely the fact that they are mandating every business small or large to maintain their records in a fashion that places HMRC and taxation at the head of the queue. Not the business necessities, not the available funds and most certainly not the ability of the owner to implement the systems.

When accountants advise on business record keeping they handle the issue in the whole; weighing up how they can set up a system that gives the owner what they want/need and which also enables the taxation in all its shapes and sizes to be ascertained and their legal obligations to be completed with the least disruption. 

The Making Tax Digital proposals frankly put the cart before the horse and no matter what HMRC pontificate about how their proposals will help businesses there is only one certainty in what they are proposing and that is that they will help HMRC to shed staff and reduce their costs.

As we responded, if HMRC genuinely believe that digital is the future, then make it available and make it so attractive and so easy that we will all want to engage when WE are ready.

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.

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