MTD bookkeeping Making Tax Digital Brealey and Newbury Accountants

Making Tax Digital back on the Agenda

HMRC has put Making Tax Digital for Business (MTDfB) back on the agenda in a big way by revealing an ambitious plan to introduce it to small firms starting in 2022.

Businesses will have little more than a year to recover from corona virus and the introduction of IR35 and the Construction Industry VAT Reverse Charge Scheme – both of which arrive next Spring – before they grapple with the challenges of digital record-keeping.

Through MTDfB, HMRC aims to get all but the smallest of unincorporated businesses and private landlords (the self-employed) on to real-time record keeping. Under MTDfB, they will file regular updates of their income and expenditure using MTD-compliant software. This will happen at least quarterly.

Timeline

The Government has an ambitious appetite to push on with the roll out of MTD, as follows:

From April 2022 – the voluntarily VAT-registered (VAT-able turnover below £85K) will be required to digital tax service’ and move to keeping digital VAT records and submit VAT returns using MTD-compliant software.

From the first day of their annual accounting period starting in the 2023/24 tax year, income tax requirements will apply to the self-employed with annual turnover above £10K.

There is a new determination to change the way the self-employed are taxed and managed. This arises from the Chancellor’s difficulties in devising a workable and fair coronavirus support scheme for the self-employed.

HMRC comments:

‘This period has emphasised the value of having access to real-time data and a more up-to-date overview of taxpayers’ financial position. Real-time data would have provided the Government with a more accurate picture of the trading and profit levels of the self-employed enabling support to be better targeted.’

‘We will also look at the long delay before the self-employed need to register and submit trading data. With earlier registration and information, it would have been possible to support those who recently set up in business, without exposing the scheme to fraud or organised criminal attack. This will form part of broader work to update the tax administration legislative framework.’

MTD Pilot

HMRC’s timetable allows the self-employed and their agents time to plan and gives software providers enough notice to bring new Making Tax Digital products to market, including free software for businesses with the simplest tax affairs.

HMRC will expand its pilot service from April 2021 to allow the self-employed to test the full end-to-end service ahead of mandation.

What about companies?

The Government will also consult in the Autumn on the detail of extending Making Tax Digital to incorporated businesses with Corporate Tax obligations.

0 0
Feed