MTD is designed to move the reporting of tax in to the digital environment. Why? Well, HMRC want to give themselves the best chance of ensuring they collect as much tax as they can, (They would do, wouldn’t they!) and requiring quarterly information from businesses means they can do this.
Tests using the proposed software have already been done by HMRC for Income Tax and tests for VAT will start in Spring 2018. The data required from April 2019 will be for businesses above £85,000 (The thresh-hold for registering for VAT), with those businesses being required to submit quarterly data.
The current plan is to extend this to Income Tax from 2020. Now, call my cynical (I prefer realistic!) but a lot of government related activity tends not to run to timescale and ends up with issues and delays, so don’t be too surprised if this gets delayed.
One very important point on the Income Tax quarterly requirements is that you will only be required to submit electronic data each quarter, not do a tax return each quarter. It will not mean paying quarterly income tax either. What it will do is tell you how much you are likely to be paying come the end of the tax year, though.
This is going to hit businesses hardest who don’t currently use online or other software for their records, like those using spreadsheets or those just keeping manual records and/or paperwork. It’s also likely that you will have some extra costs too. If you fall in to this category, give me a call and I will give you some free advice.
If you do use online software currently (like Xero, for example), then you already have this information, so the process shouldn’t really impact you much.
If you want to discuss this further, then please give me a call or e-mail me (details below), or if I can help you with anything accountancy related, please let me know.
Qualified Accountant since 1989, I worked in industry until 2013, when I set up my own business, specialising in accountancy support for small businesses.
My services include self-assessment returns, Limited...