An Update On Making Tax Digital
Are you ready?
POSTED BY GEMMA BARRY ON 25/09/2017 @ 8:00AM
According to HM Revenue & Customs (HMRC), Making Tax Digital is an essential part of the Government’s plans to make it easier for individuals and businesses to get their tax right and keep on top of their affairs ...
The roll-out of Making Tax Digital has already begun. Are you ready for it?
copyright: fgnopporn / 123rf stock photo
On 13 July 2017, the Government announced that Making Tax Digital (MTD) would be delayed for businesses until 2020 except for VAT. MTD then featured in the Finance Bill information published on 8 September, and further draft legislation and guidance was published on 13 September.
"Making Tax Digital means the end of the annual tax return for millions!"
The original plan from the Government and HMRC would have seen small businesses and sole traders to start quarterly reporting from April 2017, but those with a turnover below the VAT threshold (currently £85,000) will now be exempt from quarterly reporting requirements unless they choose to do so.
April 2019 will be the starting date for unincorporated businesses with a turnover above the VAT threshold to start keeping digital records for VAT purposes only. Businesses will not be asked to make the switch to MTD and update HMRC quarterly for other taxes until at least 2020.
The roll-out of the initiative has already begun. Every small business owner and individual taxpayer now have access to a digital account that they can use to check their records and manage their details with HMRC.
"Have you accessed yours yet?"
Under MTD, HMRC aims to join up its internal systems and so create one account for each taxpayer, for all their different taxes. The aim will be that through your digital account you will be presented with a complete picture of your business’s tax affairs and you will be able to manage all of your liabilities at the same time, in one place.
Although HMRC claims that the annual tax return will go, businesses will still need to prepare year end accounts, renamed as the 'year-end declaration', in order to reconcile their quarterly payments and claim various reliefs and make accounting adjustments.
As part of the year-end declaration, it appears that HMRC will pre-populate some of the return figures such as bank interest, income from employment and pensions using the links with other internal systems. It is important to remember to check any pre-populated fields as HMRC will not always be correct.
Here at Essendon, we are working closely with our software providers to prepare for our clients and their Making Tax Digital requirements from April 2019.
If you have any queries in the meantime, please call us on 01908 774320 or click here to ping over an email and let's see how we can help you.
Until next time ...
More about Gemma Barry ...
Gemma is ATT (Association of Taxation Technicians) qualified, and has worked at Chancery for 10 years before joining Essendon as the Tax Compliance Team Leader. In addition Gemma has now taken on the role as practice manager.
Gemma’s day to day duties include assisting clients to ensure they pay the correct amount of tax and meet their filing deadlines, organising the practice and the people within it.
In Gemma’s spare time she enjoys travelling, going to the cinema, and is a fair weather cyclist.
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