On 31 January HMRC published the outcomes of last year’s six consultations
surrounding Making Tax Digital. Whilst we are still ploughing through the
detail, it has to be said that so far the outcome has been rather disappointing,
and it feels that HMRC and the Government are not listening to taxpayers,
advisers, or their own MPs. Businesses will certainly need the help of their
accountants to be ready in time, and we will be in touch with affected clients
in due course to assist.
The background is that MTD will force mandatory quarterly online reporting
for businesses, who will have to keep electronic records in order to comply.
This includes all landlords with rental income over £10,000, or employees who
might have secondary income from self-employment over £10,000. The timescales
for implementation are:-
- April 2018 – Unincorporated businesses below the VAT registration threshold;
- April 2019 – Unincorporated VAT registered businesses;
- April 2020 – Limited companies.
There have been widespread calls for the implementation of MTD to be
delayed. This would have been sensible, given that the timescale is remarkably
tight, especially since we are still missing so much of the detail, software has
to be developed, and then millions of small businesses must implement it.
However, the scheme will proceed in 2018 as originally planned.
More frustratingly, it was previously announced that there would be
exemptions and a deferral for certain sized businesses, but the size limits for
this will not now be published until July. This makes it very difficult for
smaller businesses to plan, as they still don’t know if they will have to comply
by April 2018 or not. Sadly Government does not seem to understand that small
businesses need the greatest certainty.
A number of questions were answered though, and many of these are a step in
the right direction:-
- Businesses will be able to use spreadsheets for record keeping, but will
need to keep this in a format which can be converted by the new MTD software;
- The smallest businesses, eligible for “three line accounts” will be able to
submit a quarterly update with only three lines of data (income, expenses and
- Invoices and receipts do not need to be stored digitally;
- Year end information must be sent in within 10 months of the last day of the
accounting period, or by 31 January, whichever is sooner. This is welcome, as
the originally proposed 9 month deadline would almost certainly have seen
Christmas having to be cancelled for accountants!
- For partnerships with turnover above £10m, MTD will be deferred until 2020.
How can we help?
We will be working with our clients in the run-up to their implementation
date, to help ensure you are ready.
For some, you may already be running appropriate software in such a way that
transition will be easy, and we will only need to help explain what you need to
For many, we will be able to help you implement or upgrade to appropriate new
digital software and procedures so that you can comply yourself each
And for those who have no wish to get involved at all, we will still be able
to deal with all of your reporting requirements on your behalf, without your
having to get involved with the software.
Our flexible, tailor made service, will allow us to be involved as much or as
little as you need.
Expect to hear more in the coming months!