HMRC’s new Making Tax Digital reporting system is being introduced for businesses, sole traders and landlords from April 2018. The aim is to join up HMRC’s internal systems by creating one account for each taxpayer so businesses can provide its information more accurately and closer to real time.
In his budget speech on March 8, Philip Hammond confirmed the timescale for the compulsory entry into the Making Tax Digital scheme as follows:
- April 2018 businesses/landlords with turnover above the VAT threshold
- April 2019 businesses/landlords with turnover below the VAT threshold
- April 2019 VAT registered businesses/landlords
- April 2020 businesses liable to corporation tax
- April 2020 partnerships with turnover above £10m
Businesses and landlords with a turnover below £10,000 will be exempt from the scheme.
So what does Making Tax Digital involve?
- Accounting records must be kept digitally ideally using a suitable accounting package although HMRC have conceded that they will accept information kept on spreadsheets.
- Accounting information must be reported to HMRC quarterly.
- An annual summary must be reported including tax adjustments to accounting records.
- A new penalty regime has been introduced for Making Tax Digital submissions although this will not be introduced straight away.
HMRC has not yet released any detailed information on Making Tax Digital but as more information is released, Pierce will provide an update. We are currently reviewing our clients to identify who the new rules will apply to in April 2018 and will shortly be contacting those affected with advice on what they are required to do to comply.
The government will not be providing software for businesses, we can offer advice on accounting software packages for those who currently keep manual accounting records. We have a range partners with various cloud accounting software providers covering a wide cross section of the market and we can help you choose, setup and configure the best choice of software for your business.
For more information visit http://www.pierce.co.uk/cloud-accounting-software/ or contact Ben Davies on 01254 688100 or firstname.lastname@example.org.