Making Tax Digital is coming…..
Making Tax Digital or MTD isn’t that far away for some and it won’t be long before all business owners are looking for advice and support. Indeed many accountants are concerned about the impact of the changes and how they will affect their clients and work loads but here at Always Accounting we are embracing the changes and working in partnership with software providers to make the MTD roll out as smooth as possible.
So where do we start? We have tried to keep it simple to help guide you through this change. Here are some of the common questions we are asked.
What is MTD? – HM Revenue and Customs want to transform the tax system. By 2020 they aim to move to a fully digital tax system. So they have introduced the Making Tax Digital strategy.
The plan is that by 2020 form filling will be gone – No more tax returns, HMRC say they don’t want to know what they already know!
The idea is that the new system will mean they are operating on a more “real time” basis as they currently do with reporting PAYE. The plan is that this will remove the risk of missing deadlines, penalties, debts and errors in their systems being carried forward from one year to the next.
Every taxpayer will have a digital account, this will be where HMRC would like information reported to at least once a quarter.
The advantage of this is that rather than waiting months to know as a taxpayer how much tax you will have to pay, you will know earlier, therefore budgeting your liability should be easier.
So, as a taxpayer what do I have to do? – If you don’t already keep your records on accounting software you will be required to do so. You will need a digital account with HMRC where you or your accountants will submit an online report of your quarterly figures. In your digital account you will be able to report any changes directly to HMRC without having to call and navigate your way through their telephone system. Hurrah!!
So, when does this all come into effect? HMRC have started their pilot for MTD but their intention is that sole traders, partnerships and unincorporated landlords with income above the current VAT threshold of £85,000 will be reporting under MTD for the first accounting period starting after 5 April 2018. In 2019/20 all businesses, self employed people and unincorporated landlords which have a turnover over £10,000 but under £85,000 will also have to report under MTD. HMRC will then move onto VAT (2019), so whether or not your reporting VAT quarterly you will be required to do so via MTD compliant software. Then in 2020 companies, incorporated landlords and complex partnerships will also be required to update HMRC quarterly via MTD.
So, where do we come in? – We will help you to become MTD ready. The timing of this will depend on your individual circumstances but rather than preparing and submitting your tax return each year we will support you with getting set up on software that is MTD ready and ensure you are keeping up with your obligations to HMRC.
We are excited to be working with some of the best MTD software providers, having recently been fortunate enough to have had a demonstration of the first MTD compliant software build, giving us reassurance that we can offer our clients a headache free MTD experience.
If you would like to know more or would like us to give you that support please get in touch.
HMRC have suggested they will release an MTD update in July after the General Election and any significant changes will be updated via our blog.