T he proposed plans to introduce online tax reporting from 2018 (for large businesses) and 2019 (for small businesses) may have been temporarily postponed by the government as a result of the snap election, but it has been just that: postponed and not abandoned. Graham Doubtfire, Tax Partner at Scrutton Bland answers some of the questions clients are asking about what this means or businesses in the region. For anyone who doesn’t know, what is Making Tax Digital (MTD)? HMRC (Her Majesty’s Revenue and Customs) have announced that they intend to “bring businesses into the digital age” by requiring them to submit Tax Returns electronically rather than having the option to use a paper-based option, or via the HMRC portal on their website. All businesses and individuals will be issued with a personalized digital tax account and will have to maintain digital records and repost to HMRC using MTD compatible software. So when is this going to happen and what has changed? Originally scheduled to start next year, the start dates for MTD have been pushed back and the key focus is now on businesses with a turnover above the VAT threshold, which is currently £85,000. Plans are now that these businesses will have to keep digital records for VAT from April 2019, and report on a quarterly basis. The other change will be in the way that businesses will report their data to HMRC. Up until now many clients have used the HMRC website portal to key in their data, however this will not be available after April 2019 and they will be obliged to use software which has the functionality to seamlessly transfer the figures to HMRC. One of the biggest concerns from our clients was the requirement to report quarterly returns to HMRC. This has also been delayed, in this case to at least April 2020. The exact start date will depend on the business’ financial year end, and will initially apply to VAT registered businesses with an income over £85,000.
April 2019? Isn’t that too far away to worry about now? Have you never heard of the Boy Scouts’ motto? Be prepared! Our advice to all our clients is to start organising themselves now, so that by the 2019 start date their software systems are set up and tested, and ready to go. Scrutton Bland have been running a series of MTD events across the region over the summer and will announce more once we know what the government’s plans are, following the Chancellor’s autumn statement. Not everyone is digital ready, what if a business still using manual records for tax returns? There are still many businesses who feel comfortable using traditional paper-based methods of recording their business information. With MTD as long as you can operate a smartphone or tablet then you can report to HMRC from that, using the correct software package. However we would suggest that businesses use MTD as an opportunity to look at the systems they use to keep financial records, and to ask themselves what information they need to extract from those systems to run their business. What about MTD compatible software? Will HMRC provide this? HMRC will not be providing free software so it is likely that most businesses will need to make an investment in some level of software package themselves. Many of Scrutton Bland’s clients have already made the transition to digital accounting via our SBLive service, and we are currently working with our software providers to assist with the development of SBLive to ensure it is fully compatible with HMRC’s requirements. For more information on MTD and to find out more about Scrutton Bland’s MTD training and information programmes, contact Graham Doubtfire on 01206 838437 or email graham.doubtfire@scruttonbland. co.uk
Plans are that businesses above the VAT threshold will have to keep digital records from 2019.
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