We’re gradually moving all our clients over to cloud-based software in order to be ready for HMRC’s “Making Tax Digital for Business” initiative (MTDfB). This will ultimately help us supply quarterly information (not payments) to the Revenue, giving our clients and the government a better idea of the tax that will be due at the end of the year. It should also help our clients see just how well their business is faring.
If you’re not familiar with this initiative, it’s worth familiarising yourself with the basics…
HMRC estimates that three million of the smallest businesses and landlords will be able to move to this new digital system for keeping tax records. MTDfB will help bring the tax system into the 21st century by providing businesses with a modern, streamlined system to keep their tax records and provide information to HMRC.
The planned Roll out for MTDfB will ensure businesses have plenty of time to adapt to the changes. Under the timetable:
- Only those businesses with a turnover above the VAT threshold (currently £85,000) will have to keep digital records and only for VAT purposes. They will only need to do so from 2019.
- Businesses will not be asked to keep digital records, or to update HMRC quarterly, for other taxes until at least 2020.
- Making Tax Digital will be available on a voluntary basis for the smallest businesses, and for other taxes.
- Businesses with a turnover below the VAT threshold will be able to choose when to move to the new digital system.
- As VAT already requires quarterly returns, no business will need to provide information to HMRC more regularly during this initial phase than they do now.
- All businesses and landlords will have at least two years to adapt to the changes before being asked to keep digital records for other taxes.
HMRC say they are fully committed to supporting businesses in this transition. They will start to pilot MTDfB for VAT by the end of this year, starting with small-scale, private testing, followed by a wider, live pilot starting in spring 2018. This will allow for well over a year of testing before any businesses are mandated to use the system.
Further MTDfB details are available on the HMRC website here.
For more information on Accountancy and Office Services’ preparations for MTDfB, call Vallery Lee on +44 1295 812714 or +44 7767 831403 between 09:00 and 17:30 weekdays or 09:00 and 12:00 Saturday mornings. (You can also email us using the message form here.)