Perhaps George Osborne’s only really interesting announcement in the March 2015 budget was the move to creating a fully digital tax system, which would be updated in real time, allowing tax payers and HMRC, at the same time, to know exactly what tax was due during each annual tax cycle and when it was payable.

The digitalisation is planned to start this year, and will be one of the biggest changes to the UK tax system in years.

It will affect both the way information is received by HMRC and the way tax will be collected.

The changes will require taxpayers to submit digital accounts on a quarterly basis by 2018 and could mean the end of the annual tax return.

Taxpayers and businesses will have instant access to their tax affairs and the ability to make easy payments online. It should also improve communication with HMRC, (tax professionals may need some persuading on this point).

By June 2016 every individual and all small businesses will be able to access their digital tax account, and within four years HMRC expects the full range of services to be available to all tax payers’ taxpayers through these accounts.

Authorised agents gain access to their clients’ accounts later this year.

So what will this really mean for business?

Most business already use technology, be it online banking, emailing, ordering stock etc. HMRC believe digitalising tax affairs is just the next step and most businesses will find the transition straightforward, indeed most have found Real Time reporting of PAYE and NIC fairly straightforward.

There will obviously be teething problems along the way. Not least that the tax accounts already set up are neither user friendly nor do HMRC staff understand them or are they fully linked together.

Income Tax does not appear to talk to National Insurance and vice versa.

Going forward once “Tax Customers” and HMRC have been operating the system for a while then it should work.

It will not, we believe, reduce the amount of input required from businesses’ accountants and tax agents, and is yet another example of pushing compliance down onto the individual business or tax payer.

What it could however herald would be real time payment of tax for the self-employed and small businesses accelerating considerably the date on which their tax is paid so that it becomes similar to income tax and national Insurance paid through the PAYE.

For further information, please contact Alastair Byrne on ajb@jwpcreers.co.uk