HMRC launched its pilot for Making Tax Digital in April, however, at this time HMRC is not as far forward in being able to deal with its new initiative as it had hoped. When Theresa May announced that there would be a general election on 8 June much of the previous Finance Bill was axed, however, we should not become complacent that it has gone, just delayed. At the present time, the following dates have been released for when MTD will apply to different businesses/individuals:
• April 2018 for income tax and National Insurance contribution (NICs) purposes if your turnover is over the VAT threshold
• April 2019 for income tax and NICs purposes if your turnover is below the VAT threshold
• April 2019 for VAT purposes for everyone who is VAT registered
• April 2020 for Corporation Tax (CT) purposes for everyone who pays CT
Businesses, self-employed people and landlords with turnovers under £10,000 are exempt from these requirements.
Those in employment who have secondary income of more than £10,000 per year through self-employment or property will also be required to use the digital service.
In the consultation, the government said that it was considering exempting more of the smallest unincorporated businesses from the requirement to keep digital records and make regular updates to HM Revenue and Customs (HMRC).
The Making Tax Digital principles will require businesses to record their income and expenses using software that will allow the tax treatment of each transaction to be identified so that a report can be generated quarterly summarising a business’s trading activities.
Many people fear that tax will become payable quarterly too, at this time HMRC have not suggested that this will be the case and tax will continue to be payable by the January following the end of the tax year, unless payments on account are due, these too will remain unchanged. This could be an expensive time for businesses who currently maintain their records manually or using excel as this will no longer be accepted as a means of recording business income and expenses.
We are familiar with several different software providers who have developed their software to be Making Tax Digital compliant. In addition, we have had discussions with a number of clients who have reviewed their bookkeeping arrangements with this new requirement and have decided that transferring their record processing to us to ensure that the new legislation is adhered to.
As software developers are keen to attract new clients we have been able to secure preferential rates for new clients who move their business records to software providers with which we are collaborated, please get in touch to discuss the discounts we can offer