Today, Tomorrow, Sometime, Soon.

06/09/2016

We are familiar with the hollow promises of politicians, so many will have dismissed the budget announcement relating to tax digitalisation as another ‘today, tomorrow, some time, never’ issue. Despite the recent political turmoil this would be unwise.

Tax authorities in other jurisdictions already require regular information updates. In the UK we have seen the introduction of Real Time Information for payroll and are used to quarterly VAT reporting. Indeed many farmers make their VAT returns monthly. The Inland Revenue is very IT savvy and is hugely aware of the Internet’s power.

We may expect the initial level of reporting to be basic but as the technology is proven and tax payers become familiarised with the procedures more will be demanded. This will present a huge challenge to those who wish not to miss opportunities for mitigating our tax liabilities. Will unchecked and unconsidered data be submitted or will the accountant be involved prior to every submission?

The problems will be greatest for those with manual bookkeeping systems. Where computerised bookkeeping packages are used things may be easier. It is likely that many software packages will enable direct input to the Inland Revenue reporting software. However, without scrutiny of the records this could be dangerous. At least with electronic software it should be possible to transmit the data to the business’s tax adviser for review prior to submission. This will be easiest for those with software packages which include provision for transfer of data via the Cloud. For example, Sage Drive is a facility that enables some Sage packages to be transferred between users. Farmplan similarly has developed a system that allows software to be securely parked in the cloud from where, with authorisation, it can be downloaded by a third party.

The greatest facility for the sharing of data between, for example, the businessman and his tax adviser, is offered by Cloud Accounting software packages such as Xero and QuickBooks Online. Landmark Systems software is now available as a Cloud hosted application. Because the software is permanently held in the Cloud protocols can be established allowing access by several users without hindering the business’s use of its records. This removes the onus from the businessman to provide data by allowing the accountant to access the system whenever necessary.

These changes must be a godsend to the marketing arms of the Cloud software providers and will encourage other software providers to make remote access easier. Manual systems seem increasingly inadequate to cope with the reporting requirements.

The tax digitalisation changes are flagged to be introduced from April 2018. For ‘today, tomorrow, sometime, never’ read ‘today, tomorrow, sometime, soon’.