Letters / Tax-reporting changes will hit most vulnerable businesses
If there is one thing that businesses crave it’s stability, and that is precisely what is lacking at the moment. The recent travails of the oil and gas industries and public sector cutbacks have been compounded by Brexit and its fallout, and all have conspired to make this country a very uncertain place indeed.
No wonder that the latest Federation of Small Businesses member survey, undertaken just before the EU Referendum, revealed that more small Scottish businesses expected trading conditions to deteriorate than believed that they will improve.
This is very worrying, for above all else in this post-Brexit world, we need a positive, strong, confident, dynamic, outward-looking business community, one that can create the wealth that this country so obviously depends on.
We must now look to the UK and Scottish governments to restore business confidence and bring this about.
Here’s one innovation that, if introduced, will impact negatively on many crofters and others with small businesses in Shetland: the UK Government’s proposed new quarterly tax reporting system.
The UK will have a fully digital tax reporting system by 2020, one designed to make best use of digital technology to create a simpler, faster, more efficient and convenient way for businesses to submit their figures.
Sadly, some people in this region might not have access to broadband by 2020, so they will be able to stick to the current system, but if broadband is available then digital must be used.
According to Philip McNeill of the Institute of Chartered Accountants of Scotland (ICAS), while crofting generates £85.8 million in revenue, average individual croft revenue is only £4,900, and crofting-related costs £3,900.
Croft diversification (eg operating a B&B, self-catering business or boat trip) is therefore vital for survival, average non-crofting related income coming in at around £27,000 a year.
Under the new system, crofters and others with diverse income streams from self-employment, will have to keep their accounts bang up to date, no matter how busy they are with lambing, guests and other business activities. They will also have to report their results to HMRC every three months.
This will require a degree of expertise that many might not currently have, and it could also increase costs, whether they be in additional accountancy fees and/or the purchase of computer hardware or software. As we know, increased financial pressures and stress can be very damaging.
FSB is working with ICAS and others to highlight the threat posed by this quarterly tax reporting proposal to our smallest businesses in our most vulnerable communities.
If you are concerned about your own position, tell your MP now!
David Richardson
Development Manager
Highlands & Islands
Federation of Small Businesses
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