As of April 2018 Inland Revenue has introduced a accounting method. AIM (Accounting Income Method) is being pitched as an easy way that your business can pay tax as you earn profit and as an alternative to paying estimated provisional tax.
To be eligible to use AIM you must:
AIM is set up through your accounting software (Xero, MYOB, Reckon) and can be filed monthly or two monthly. Your accounting package will access if you are required to make a payment and generate a statement of activity for you at the end of each period.
Inland Revenue have said that, “AIM-capable software has the functionality to work out if it needs to include adjustments, for example:
The profit remaining is used by your software to work out your provisional tax payment based on your:
If there’s no profit you won’t need to make a provisional tax payment.”
Inland Revenue have also stated they have “worked to make sure AIM doesn’t increase ongoing compliance costs and is simple for you to use during the year. AIM will help you spend more time on your business instead of worrying about tax bills”
But only time will tell if there are any bugs in the system. I will keep you updated as feedback comes in from colleagues that are using it, but in the meantime there are links below to articles on the Inland Revenue site where you can get more information: