Making Tax Digital - No Turning Back
Fife Chamber member M&S Accountancy and Taxation sent in this informative piece:
As might have been expected, HMRC chose the busiest day in a tax adviser’s year (and football’s transfer day deadline) to publish what is to happen with Making Tax Digital, following a record breaking number of responses (over 3,000, more than 20 times the average) to the consultative documents in November last year.
Given the scale of what is to take place, a full update on what HMRC published yesterday will follow once we have had a chance to review the position in detail.
Meantime a brief summary of what we do know is:-
No Delay in implementation - Despite almost universal pleading for a delay in MTD being introduced, HMRC have totally ignored the concerns raised and are ploughing ahead regardless with the change for millions of businesses due to come into effect from 6 April 2018 (just over 14 months away).
Spreadsheets to be permitted – Many taxpayers keep excellent accounting records on spreadsheets and this is about the only area where HMRC have listened to the thousands of responses. Businesses will still be allowed to continue to maintain their accounting records on spreadsheets but, and this is a big but, quarterly returns for submission to HMRC under MTD must still be carried out in a digital format so it will be necessary to transfer information from the spreadsheets on to digital software. Most businesses will therefore be forced to pay for the new software even if they don’t use this to keep their accounting records.
£10,000 threshold - All self-employed businesses and landlords with a turnover under £10,000 a year will not have to adopt MTD, unless they wish to. The turnover threshold may yet be increased for other businesses but a decision on how high this turnover limit will be is still to be decided.
More will follow but it is worth noting some initial responses. Most tax professionals are extremely disappointed that on the whole their concerns have not been listened to. Providers of digital accounts software have responded positively to HMRC’s announcement. We will let you draw your own conclusion on that!
For further information, check out our Making Tax Digital page on our website.