We are finally getting some more information on the HMRC response to Making Tax Digital proposal. This aims to enforce quarterly reporting on businesses and landlords, but still with the annual tax return due by 31 January.
A pilot scheme is starting in April 2017 with a view to rolling out live so all businesses will be covered by 2020. This is despite rumours that it was being held back as they could not get it in place in time:
- April 2018 – Non VAT registered sole traders and landlords – this has been delayed until April 2019 after the Budget 2017, so will only apply to VAT registered sole traders
- April 2019 – VAT registered businesses except limited companies
- April 2020 – Companies paying corporation tax, ie Limited companies
Spreadsheets can be used but they must:
- include digital record-keeping functionality
- provide quarterly information updates
- support end-of-year activity
The detail it seems will come out later this year once the pilot scheme is in place which leaves little time for preparation and implementation of systems. Thankfully they have confirmed that there will be no penalties for the first 12 months, and hopefully there may be some minimum turnover thresholds. Electronic record keeping is now almost obligatory there is no longer the option of paper records in our opinion.
We have access to various accounting products and would advise all of our clients to consider moving to this type of platform to cope with the additional bureaucracy being imposed by the government Making Tax Digital legislation. You should seek professional advice if you have any questions on this legislation. If you would like advice in this or other areas feel free to call. Alastair Wood, AW Accounting, Gravesend, Kent – Accountants who “speak your language”