On 31 January 2017, HMRC published their response to the Making Tax Digital (MTD) consultation process which took place in the autumn last year.
Although they have taken on board some of the concerns raised by the profession, the delay to start in April 2019 has been ignored.
A summary of what we know so far:
- It starts in April 2018 for individuals, unincorporated businesses and most partnerships
- Under the new system, there will be quarterly reporting of income and expenses and then a further annual declaration making a minimum of five submissions to HMRC each year.
- Quarterly reporting is not confined to businesses. Landlords will also be required to report quarterly if annual rents are high enough. Limited companies and larger partnerships (turnover above £10 million) will be included later – in April 2020.
- You will have to use software or apps to keep your business records and provide quarterly updates of information to HMRC. These updates will be a summary of income and expenditure only – each transaction will not be shown.
- You will have to submit an end of year statement to include additional categories of information not included in the quarterly updates and to make any adjustments needed to calculate the taxable profit for the year.
- HMRC is to begin public testing of the MTD process from April 2017 and we intend to take part in the process.
What you need to do:
- Consider your specific needs to move over to the new record keeping requirements.
Benefits of making tax digital:
- Depending on the software which you choose as compared to your current record keeping, it is possible that the time you take in preparing your records will reduce.
- By having an adviser, such as Tait Walker, preparing your quarterly updates, they will have a clear view of current profitability. This information will allow us to give you timely advice on tax planning.
For further information and insight, please visit our Making Tax Digital page.