Charities need to start caring about the new digital tax rules – here’s why
It may not be glamorous but tax is going digital, and charities will soon need to comply with the new rules, which will benefit them in the long run.
What can charities do to get ahead of the new digital tax rules? Our free webinar in partnership with Oracle NetSuite explains just that – sign up here to get the essential information on 22nd August.
Whether you’re a major corporation or a tiny two-person charity, tax is unavoidable. The way organisations process their tax is changing, and this is unfortunately also compulsory.
From October 1st this year, tax is going digital for all charities. The Government is enforcing major new rules about how organisations process and submit tax and payments – the scheme is called ‘Making Tax Digital’ and much like the digital switch over with TV, it’s happening whether organisations are ready or not.
Under these new rules it will no longer be good enough to store and submit your tax information on paper or even in standard spreadsheets – financial information such as tax returns will need to be done through HMRC compliant software to be accepted. They will need to be submitted online and organisations will also need to keep digital records of their taxes.
The main aim of the Government’s push to digitise tax by 2020 is to make tax administration more efficient and easier for taxpayers to get right first time, while also saving the Government money on tax management.
This ‘new and improved’ system will see self-assessment replaced by one of an approved list of more accurate tax management software that will need to be used by all organisations that process tax.
While businesses have had to comply since April, the charity sector has been given more time to adapt considering they often lag behind their commercial counterparts in embracing digital transformation. The latest Charity Digital Skills Report reveals that charities are lagging behind in terms of digitisation, with 52% not even having a digital strategy.
It is at times like this that charities have the opportunity to truly be more effective in the way they work. While it might seem like an inititial investment in new software, for time and cash strapped charities the pay-off could be time and energy saved and a more accurate tax calculation that could save charities from paying off more than they have to each time they submit a tax return due to errors.
What can charities do?
HMRC is not offering its own software products, but it’s provided Application Programming Interfaces (APIs) that commercial software developers are using to build a range of compliant apps. Some of these apps are standalone, and some are ‘bridging software’ that can connect non-compatible software (like spreadsheets) to HMRC systems.
The benefit of this approach is that commercial software developers can offer a more flexible and tailored range of options, specifically catered to sectors including charities, that should help make life even easier for them.
If you want to know more about choosing the right software and making the key changes needed, we recommend catching our free webinar for charities on the 22nd August. We will also explain in more detail how charities can best kick start the process of moving, get clear on whether or not they need to with their current set up, and learn from charities that have already done it successfully.