Making Tax Digital for Business (MTDfB) – New Timetable
Just as everyone was getting ready for an April 2018 start date for Making Tax Digital for Business, the government has done an about turn and radically changed the introduction timetable.
Many in the profession had expressed concerns about the speed with which the new system was to be introduced and now it appears that the government has taken these concerns on board.
As a result, here is what will happen under the new timetable:
Only businesses with a turnover above the VAT threshold (currently £85,000) will have to keep digital records and only for VAT purposes
They will only need to do so from 2019
Businesses will not be asked to keep digital records, or to update HMRC quarterly, for other taxes until at least 2020
The government has said that Making Tax Digital for Business will be available on a voluntary basis for smaller businesses and for other taxes, which means that businesses and landlords with a turnover below the VAT threshold will be able to choose when to move to the new digital system.
So the good news is that unless your business is VAT registered, you will have at least two years to get ready before being required to keep digital records for other taxes.
Compare with the old timetable
Unincorporated businesses and landlords were going to have to apply MTDfB from April 2018.
If turnover was £85,000 or more, the requirement to make quarterly submissions was to begin with effect from your first accounting period beginning after 5 April 2018.
If turnover was below £85,000 but above £10,000, the requirement to make quarterly submissions was delayed until your first accounting period beginning after 5 April 2019.
Is it going to go away?
No it isn’t.
The press release published on 13th July said “HMRC are fully committed to supporting businesses in this transition. HMRC has already begun piloting the Making Tax Digital services and will continue to do so, testing the system extensively with businesses. It will start to pilot MTDfB for VAT by the end of this year, starting with small-scale, private testing, followed by a wider, live pilot starting in Spring 2018. This will allow for well over a year of testing before any businesses are mandated to use the system”.
So although, there is a delay, HMRC’s goal of having digital record keeping and quarterly reporting for businesses has not gone away. We just have a bit more time to get used to the idea.
Are there any benefits of Making Tax Digital for Business?
There were understandable concerns about the deadline for implementation of MTDfB. However, used effectively, digital record keeping can give you in-year visibility of how your business is doing. This can help you plan, which has to be a good thing.
Yes, the purchase of software will have a cost but it can save you time in book keeping. In addition, if you are already using appropriate software, then when its use becomes mandatory, the transition will be seamless and painless.
Does this mean that Tait Walker’s approach to MTDfB is changing?
No. We are still moving ahead with helping our clients move to app-based and cloud-based record keeping as originally planned.
Why? Once set up they are cost efficient.
We are now working with clients, having discussions about digital record keeping and how it might help their businesses. We can advise on the most suitable software for your business and how to get the best out of it so why not come and talk to us so that we can help you get everything set up?
And finally, as more information becomes available we will provide you with regular updates, so watch this space.
If you would like any further advice, please contact Dorothy Johnston.