Making Tax Digital Consultation Summary
You may remember the Making Tax Digital consultations were launched last August and the much anticipated responses were finally published by HMRC at the end of last month. Here is a summary courtesy of Abbey Tax;
Dates and exemptions
The central dates for the phased introduction of MTD remain the same:
- April 2018 for Income Tax
- April 2019 for VAT
- April 2020 for Corporation Tax
But for partnerships with a turnover in excess of £10m, MTD will be deferred until 2020 because of the complexity of their tax affairs.
All self-employed businesses and landlords with a turnover under £10,000 a year will not have to adopt MTD, unless they wish to.
Individuals in employment and pensioners will also be exempt, unless they have secondary incomes of more than £10,000 a year from self employment or property.
A final decision has not yet been made concerning the potential deferred start, by one year, of small businesses and landlords with income in excess of £10,000 a year.
All businesses will be able to continue to use spreadsheets to record receipts and expenditure, which they can link to compatible software, to automatically generate and send their updates to HMRC. This is a welcome concession following strong representations from small businesses and the Treasury Committee in particular.
Three line accounts
Businesses eligible for three line accounts will be able to submit a quarterly update with only three lines of data i.e. income, expenses and profit.
No go digital
Those businesses who genuinely can not get online because of their individual circumstances, such as disability or remote geographical location for example, will be exempted from MTD.
The changes will affect most businesses, including £3.3m self employed individuals, £1.6m companies, over 400,000 ordinary partnerships and around 600,000 businesses with income from different sources, for example self employment and property.
HMRC also acknowledges the changes will affect accountants representing businesses. It believes software categorisation of income and expenditure will allow for a simpler process at the year end when the End of Year declaration is submitted and allow accountants and their clients to focus on ‘higher value business activities’.
You can read the full details of the responses here: http://bit.ly/2kAvaQd