MAKING TAX DIGITAL – THIS APPLIES TO JUST ABOUT EVERYONE, EVENTUALLY
Well, this has been another hot potato for Governments, with dates for the Introduction
of Making Tax Digital (MTD) moving about faster than Lewis Hamilton on the track.
So, first question – What is it?
According to HM Revenue & Customs it is a "key part of the government's plans to
make it easier for individuals and businesses to get their tax right and keep on
top of their affairs – meaning the end of the annual tax return for millions."
Well, that sounds good, but you're right to hear the words "good so far but"..
There are three main categories, Businesses, Small Businesses, Individuals.
Making Tax Digital for Business – Compulsory from April 2019
The key date for all but the smallest of businesses is April 2019. A small business
is defined as having a turnover below the compulsory VAT Registration Threshold,
So although you may think of yourself as a small business, and indeed fit that definition
for most things, if you have turnover above the VAT Registration Threshold then your
key date for having to start using the Making Tax Digital for Business Systems is
April 2019. And there is a lot to do to prepare for that date! And also, note that
this is about the level of Turnover, not your Profit.
Turnover includes all of your sales of goods, services and commissions - basically
any income generated by your business – also remember that Turnover applies to when
the income is generated not when you are paid for a sale – this prevents attempts
to artificially show lower turnover by manipulating payment dates. This is exactly
the same as for the definition of Turnover when determining whether the VAT Registration
Threshold has been breached.
Businesses which have a turnover below the Compulsory VAT Registration Threshold
but which have chosen to register voluntarily for VAT can choose whether to opt into
the new scheme or not.
Making Tax Digital for Small Business and Individuals – Compulsory from ?????, not
The government has committed that it will not make this compulsory before the main
scheme has been shown to work and definitely not before April 2020.
OK – but this still doesn't tell me what "Making Tax Digital" actually means!
Once an entity falls within the compulsory MTD category it will be required to keep
its financial records in digital format and to provide quarterly updates to HMRC
electronically. Basically, that's it!
Clearly this means that you/your agent will have to maintain all financial records
on HM Revenue & Customs approved software. You may keep your financial records "on
the computer" already, but unless this is using approved software then there will
have to be a change in the way you keep your financial records. And yes, in case
you are wondering, HMRC are also providing free software packages and Apps.
Which is why it is important to look at this matter soon because you could be facing
a major change.
We can help you with:
1. Checking to see whether your current financial records will comply with the MTD
2. Helping you to make small changes to your current systems if that's all that is
3. Helping you to choose the most suitable approved software for you if you have
to, or indeed wish to, change
4. Helping you to set up using your new software
5. Supporting you in using your software, whether new or existing, to meet the various
6. Helping you to set up a timetable so that you can keep on top of the quarterly
7. Providing a reminder system to you if you so wish
8. Being available to you outside normal office hours for your key dates if you want
us to "be there for you" at those times in particular
9. Discuss ways in which we could take over or partly take over your financial record-keeping
if you so wish
10. Number 10? Well, we pride ourselves on our good communication and mentoring
skills to make it as painless for you as possible!
THE BIG THING IS: –
IF YOU HAVE A VAT REGISTERED BUSINESS YOU CANNOT AFFORD TO IGNORE THIS
DO IT NOW AND THEN YOU CAN STOP PANICKING AND FEEL SMUG WHEN ALL AROUND YOU ARE BECOMING
ANXIOUS AT NOT HAVING STARTED EARLIER!