I spent all day today studying MTD = Making Tax Digital.
See: https://www.gov.uk/government/publications/making-tax-digital/overview-of-making-tax-digital.
I also watched a seminar from Sage, and got some docs from QuickBooks to get all their data.
Here’s my summary:
HMRC wants to make ALL tax digital (electronic) eventually. They are starting with VAT-registered businesses who have a turnover greater than the current threshold of £85,000 per annum. Starting with the VAT quarter which starts on or after 1 April 2019, those businesses now have to record all their accounts digitally, and they have to submit these VAT returns using MTD-ready software. In other words, those businesses can no longer do their accounts manually and go to HMRC website and manually enter the VAT return. There is mention that you might still be able to use spreadsheets, but then you’d need some software which will transpose the figures from the spreadsheet into that software to enable to VAT return to be submitted to HMRC via the software. I would think it would then be easier to simply do the accounts in a bookkeeping software instead of a spreadsheet.
The next on the HMRC time line, is that from 1 April 2020, all VAT-registered businesses who have a turnover below the current threshold of £85,000, will also then come under the same regulations, and will have to record their accounts digitally, and submit their VAT return to HMRC using MTD-ready software.
They are moving towards ALL tax matters to be recorded and submitted digitally, and this will include Self-Assessments. There is also mention of self-employed people (I’m guessing meaning those who are not VAT-registered) will need to record and submit quarterly accounts via digital software, but this is not mentioned on the timeline as yet, so no details are known about this at this time.
I’ve also not found any mention so far on the timeline about CIS returns, so I’m not sure what happens with that. Currently I submit CIS returns manually via the HMRC website. I guess that will also be subject to the same changes. (note: CIS means: Construction Industry Scheme)
Lots of changes then, especially for those of you who do not currently record their accounts digitally. It may be time soon to invest in either some software (and training) yourself, or invest in a good bookkeeper to do this for you.
I will endeavour to keep you up to date with such changes as they become published.
As always, keep it simple and… Flourish and Prosper 🙂
