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The more that businesses are prepared for change, the more they have embraced a flexible change culture, the better able they will be to assimilate external changes
In our last article, ‘embracing change culture’, we talked about the importance of creating a flexible and agile culture which would help to future proof businesses against the threat of change. One such external threat which will impact SMEs over the next couple of years is the government’s plan to move towards real-time tax compliance.
At HMRC’s recent stakeholder conference the Financial Secretary to the Treasury, David Gauke, set out plans for every individual and small business to have access to their own digital tax account by the end of the next parliament, with 5 million small businesses expected to be given access early in 2016. Although in the early stages the tax account will be fairly basic, the plan is that by 2021 digital tax accounts will be linked to business bank accounts and to an app which will manage business finances. This will not only integrate reporting profits and paying tax into the business life cycle, it is envisaged that the app will highlight and report any activity which is outside the norm, prompting business owners to investigate and report tax changes.
Although the plans are still in the early stages, HMRC is working with stakeholders to identify and iron out problems such as businesses with multiple bank accounts, cash transactions and those micro businesses which are not particularly digitally savvy. However, with HMRC’s definition of small businesses being anything from one-man bands to those who employ up to 20 employees and have a turnover below £10m, it is inevitable that these digital tax changes will impact all SMEs to a greater or lesser extent. The more that businesses are prepared for change, the more they have embraced a flexible change culture, the better able they will be to assimilate external changes such as digital taxes into their day-to-day processes.