COLUMN: Are you ready to make your accounts digital? Asks Brian Floringer of Lovewell-Blake
Making Tax Digital for Business (MTDfB) is a new HMRC initiative.
Businesses and landlords will be required to maintain digital accounting software for their bookkeeping. Spreadsheets will be acceptable but the data created by the spreadsheet will need to be able to convert into a format that can be sent online to HMRC.
There will also be a requirement to submit quarterly online updates to HMRC. The quarterly updates are not required to include any tax adjustments for items such as capital allowances or expenditure that is not allowable for tax. These adjustments will be made after the end of the accounting period on an End of Period Statement.
In addition to submitting the End of Period Statement, the taxpayer will be requested to make a Final Declaration. This will be used to report to HMRC anything which has not been reported in the End of Period Statement – for example, employment income or savings and dividend income.
The new system will also give taxpayers an option to voluntarily ‘pay as you go’.
The new rules will commence at different dates depending on certain criteria as follows: ■ from April 2018 for taxpayers with turnovers in excess of the VAT threshold (currently £85,000) if they have profits chargeable to income tax and pay class 4 national insurance ■ from April 2019 for taxpayers with turnovers below the VAT threshold and who have profits chargeable to income tax and pay class 4 national insurance ■ from April 2019 for taxpayers who are registered for and pay VAT ■ from April 2020 for taxpayers who pay corporation tax
There is an exemption for businesses with a turnover of less than £10,000 and for those who can genuinely show that they are digitally excluded.
MTDfB will herald a major change for the way which businesses interact with HMRC.
This article was written prior to the announcement of a General Election on June 8. The MTD proposals have now not been included in the 2017 Finance Bill but none of the political parties have said that they are going to be dropped. Therefore they may well be included in a further Finance Bill following the General Election.
Please note that this article is provided for your information only. Whilst every effort has been made to ensure its accuracy, information herein may not be comprehensive and you should not act upon it without seeking professional advice.
If you would like more information on this or any other financial issue that may affect you contact Brian Floringer on 01353 662447 or at firstname.lastname@example.org.
Lovewell Blake, 11 Lynn Road, Ely CB7 4EG