Making Tax Digital to start in April 2018…

by | Feb 1, 2017 | Blog

 Well this is unexpected….

Given the resistance from the accountancy profession I had come to the conclusion that MTD would be delayed for at least a year and possibly two. Not that it would have made much difference to us as we had already made the commitment to move all of our clients onto cloud accounting anyway but MTD was a big reason why clients should move as soon as possible.

So HMRC have decided to push ahead with their plans despite the opposition but there are a few concessions although still not sure what their real impact will be.

Firstly HMRC have agreed to allow the use of spreadsheets although it seems that this information will still have to go through some third party software before being uploaded into the HMRC systems….so why not just use the third party software anyway. Does not seem logical to me when cloud accounting is actually easier to use and potentially far more useful to the business owner in helping them to run their businesses better.

Secondly HMRC have agreed to review the £10,000 turnover exemption threshold below which MTD does not apply. Unfortunately we have no indication of where this will go. Some in the accountancy profession have argued for the same limit as VAT which is currently £83,000 but I don’t believe that this fits in with HMRC plans and the increase will be much lower than this. At £10,000 it will catch hobby businesses and landlords who may only have one property. I think £20,000 is a more likely target

Thirdly there will be a softer start to the penalty regime with no enforcement of penalties for at least the first year ending April 2019.

Trials are starting from this April with some 300 tax payers agreeing to be guinea pigs so it is still possible for further changes to be announced but we all have to accept that MTD is inevitable and that we should be ready to take part from April 2018. If you or your accountant chooses to “leave it until the last moment” then I think you are taking a huge risk because all new systems need training and time to bed in and if you don’t start until April 2018 then you make mistakes and have problems.

Interestingly HMRC have been criticized for their poor communication to the potential five million businesses affected by MTD and they have said “We do have plans to raise awareness about it, but the priority is to work with agents and software developers. We can more easily communicate with them than with five million small businesses.” This is interesting as the accountancy profession has felt for some time that HMRC would really rather deal with taxpayers direct and exclude us from the loop. So perhaps they have finally realized that most accountants are only interested in getting their clients to pay the “correct” amount of tax and we are not all selling schemes to avoid tax.

I now need to read the seven consultation outcome documents in more detail. These are:

Making Tax Digital: Bringing business tax into the digital age

Simplifying tax for unincorporated businesses

Simplified cash basis for unincorporated property businesses

Voluntary pay as you go

Tax administration

Transforming the tax system through the better use of information

An overview for small businesses, the self-employed and smaller landlords.

 

So this should keep me busy for the next day or two but I will post more information about it soon.

If you missed my previous blogs on MTD you can catch up by going to:  http://www.wood-disney.co.uk/index.php/why-choose-us/blog/251-i-didn-t-realise-i-was-that-sad

This blog has links to all of my previous articles on the subject.

 

Happy reading…

 

 

 

 

Facebook

This message is only visible to admins.

Problem displaying Facebook posts.
Click to show error

Error: An access token is required to request this resource.
Type: OAuthException

 

 

Wood & Disney Chartered Accountants
Lodge Park, Lodge Lane
Langham,
Colchester
Essex, CO4 5NE

T: 01206 233170
E: info@wood-disney.co.uk

wood and disney is the trading name of Wood & Disney Ltd, a company registered in the UK number 4143288

 

Quickbooks

Sage One
Kashflow

 

Xero Accounting

Website designed by: Website Design