Small companies excluded from digital tax – ICAEW

According to new research from the Institute of Chartered Accountants in England and Wales (ICAEW) titled: ‘Digitalisation of Tax, International Perspectives’ small companies may be excluded from government plans to digitise the tax system.

The ICAEW report compares the success and failures of countries that have attempted to digitise their tax system and found that many small companies were pushed to the sidelines when it came to making the tax system digital.

ICAEW Technical Manager, David Lyford-Smith, said: “The largest and most persistent issue in introducing the digitalisation of tax is that of digital exclusion, which is common among small businesses.”

Even though the “government can work to educate and provide resources for many affected by digital exclusion, total compliance is impossible,” Lyford-Smith said.

In an effort to avoid the exclusion of small companies Lyford-Smith suggests maintaining the traditional forms of record keeping such as paper-based filing or offering small companies ‘affordable’ agencies to keep records and files, “as an avenue for those who cannot comply with digital reporting to avoid penalties,” said Lyford-Smith.  

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