We went on a seminar last month, presented by our software suppliers. Sure, they were trying to sell us their products, but the underlying message that they carried was positively frightening. We’ve known for a while that ‘Big Brother’ is quietly taking over our daily lives, but HMRC’s initiative of Making Tax Digital is going to be a major intrusion into our business, and even personal, financial affairs.

They are selling it under the banner of removing the need for tax returns and giving us all greater and easier access to our tax affairs. What they really mean is that they are going to access digitally all of our business records. We haven’t seen the detailed legislation yet and the devil is always in the detail. But let me share with you a few of the headline plans.

Gone are the days of good old-fashioned pen and paper

Every business that is assessed to tax on its profits will have to keep its records in an electronic format that can report its transactions to HMRC. Gone are the days of spreadsheets and good old-fashioned pen and paper. Even your Sage accounting systems won’t be good enough unless you obtain the digital version.

You will be obliged to report your transactions to HMRC every quarter. No longer will you be given months after your year-end to prepare your figures. Now they are going to be reported in what HMRC describes as ‘real-time’.

For a lot of people, the change of timing will be most uncomfortable. Many of our clients write up their records at their own pace, with a lot of them thinking about accounts and tax just once a year, perhaps a few months before their returns are due for submission. This will require a complete change of mindset and introduce undue pressure to submit without having the chance to think or plan.

It doesn’t just affect businesses

Quarterly reporting also means quarterly payment of your tax. They are saying it’s voluntary at the moment, but it’s only one step away from mandatory payment. And they will have details of your bank account so it would be easy for them to extract it direct. Great cash flow for the Treasury, but not for the businesses that are the life blood of the economy that feeds the Treasury.

It doesn’t affect just businesses. Anyone with rental properties will be subject to the same rules.

Frightened yet? You should be. The legislation is scheduled for enactment by 2018 and HMRC is not for backing down.

Don’t believe me? Go to the gov.uk website and type in those three little words – Making Tax Digital – and see for yourself.