Jennifer Brooke 1 day ago
Lessons from John Lewis: How ‘Workshopping’ is Opening the Door to New Opportunities
The government have today announced that the introduction of the Making Tax Digital (MTD) initiative will be going ahead with just a small number of changes, with full roll out to be complete by 2020. Whilst this announcement has been welcomed by many, others have argued that the timeframe is too ambitious, or that MTD is an additional burden on taxpayers that should be dropped.
Michael Wood, Co-Founder of 1Tap Receipts, the expenses management app for sole traders, is a strong supporter of the initiative. He argues that automating the tax return process will help small businesses. Despite today’s announcement he urges small businesses and the self- employed to make simple changes now, so that they can reap the benefits from the government’s drive to put tax online
He explained; “Making Tax Digital marks a major change in the way tax administration is operated, but having an online account, which can be accessed at any time from any device and gives an accurate and real-time view of your tax liability is going to make life so much more straightforward for millions of people and businesses. It brings tax into line with how most of us now manage our bank accounts.”
“The current system has failed to move with the times, and puts sole traders and small businesses at a disadvantage. It’s very time consuming; recent research we commissioned found that 45% of sole traders spend five hours or more completing their tax return and 22% spend ten hours or more. It also makes getting a completely accurate and up-to-date view of your accounts very difficult, which we know poses problems for people trying to secure credit, either for their businesses or for their personal needs, such as mortgages.”
One of the key criticisms of MTD has been the recommendation for quarterly, rather than annual tax returns which many say creates an additional administrative burden and some even suggest is a means of squeezing additional tax revenue from businesses and the self-employed. Michael Wood strongly disagrees, “People shouldn’t need to wait until the end of the tax year to work out how much they have to pay. Our research showed that only a quarter of sole traders are very confident that they know how much tax they owe throughout a typical financial year – with MTD they can report information in real time and will have much greater certainty over their tax position, just as we now can with bank accounts. The idea is that by 2020, businesses and individual taxpayers will be able to register, file, pay and update their information at any time of the day or night, and at any point in the year, to suit them. Surely this has to be viewed as a positive change?”
The 1Tap Receipts app is a huge step forward in the digitising of tax information. The user simply takes a photo of their receipt and the technology then does all the work for them, including categorising the expense information. This data will then automatically populate the HMRC self- assessment form. The popularity and awareness of 1Tap Receipts has been growing quickly since it launched last year and is currently ranked the number 1 business app.
Michael Wood concluded, “Although MTD won’t be fully introduced for a while yet, there’s nothing to stop self- employed people preparing for it now by automating parts of the tax return process, so that when it’s fully introduced, they’re already reaping the benefits of a much more up-to-date and streamlined approach to managing their tax affairs. Tools like the 1Tap Receipts app, available now, will allow them to do their expenses in a fraction of the time or to work with their accountant in a much more efficient way
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Don’t forget Tax payment deadline is midnight today