Making Tax Digital
Posted: Monday August 21 2017
By: Guest Blogger
Making Tax Digital – The Latest 2017
By Claire Howarth
Making Tax Digital is the Government initiative to instigate business owners and landlords, to keep their accounting and business records digitally and provide quarterly updates to HMRC about profitability.
The term “digitally” in this scenario means to use a software or cloud platform product to record transactions and prepare simple accounts.
The original timescale for this to happen, with many businesses originally scheduled to commence in April 2018, was met with serious concerns from business owners and their advisers alike.
Up until the recent announcement very little had been published about the requirements so it was difficult to prepare for and there were many unanswered questions about the form and content of the submissions.
The plan, which was fast paced and didn’t allow time for testing of HMRC systems nor for businesses to put the necessary processes in place, has now been rescheduled as follows:
Only businesses with a turnover above the VAT threshold (currently £85,000) will have to keep digital records and only for VAT purposes, making submissions through MTD compliant software;
They will need to do so from April 2019; and
Businesses and landlords will not be asked to keep digital records, or to update HMRC quarterly, for other taxes until at least 2020.
This new timescale has been welcomed and should be used to the taxpayers advantage by allowing time to get the necessary systems and training in place to make sure they are fully compliant by 2020.
Many advisers are still urging clients to forge ahead with digitilisation as soon as possible and it is clear that having records in a format which are up to date and can provide valuable management information would be of great benefit to the operation and management of the business.
The system will be available on a voluntary basis for those outside the VAT requirements until 2020 or beyond. This is perhaps the best of both worlds, as MTD also involves better use of data by HMRC, digital tax accounts and improved digital interaction between HMRC, agents and taxpayers on an opt in basis when they are ready.
What originally seemed to be daunting in prospect now seems more achievable and with the potential of benefits for the taxpayer.
If you will be affected by these proposals it is worth speaking with your adviser as to the solutions they are offering.
Read our latest MMB Magazine article by clicking here or visit our MMB Business club page for more information on running your business by clicking here