By 2018, the self-assessment tax return as we know it will no longer exist. Companies will be expected to keep digital records of trading and transactions, providing HMRC with updates at least quarterly, with their tax position finalised at the end of the year. HMRC will also receive information from banks and pension providers. It is hoped the more frequent updates to HMRC will translate into an in-year estimate of the tax due.
Exemptions:
Unincorporated businesses and landlords under £10,000 will be exempt from the requirements; while there will be a year’s deferral for those above £10,000 but below a threshold yet to be determined.
‘Digitally excluded’ businesses are to be completely exempt, while charities, community amateur sports clubs (CASCs) and other groups yet to be decided will also benefit from exemptions, but can update online voluntarily.
HMRC is planning a two-year rollout schedule for the different tax regimes, starting with income tax and NIC reporting in April 2018, followed by VAT in 2019 and corporation tax in 2020. A good start is to mirror this incremental approach within your firm and implement new systems one stage at a time. Start with simple systems such as bookkeeping and then progress to other areas such as digital signatures, rather than running the risk of becoming overwhelmed by overhauling your entire accounting process right away.
HMRC is also reviewing the future role of the widely-used Excel spreadsheet and compatibility with the HMRC Making Tax Digital system. This throws up concerns for many businesses about whether current reliance on Excel will produce the required tax filings, and it is important that HMRC hear your views on how spreadsheets could meet the requirements of MTD. Follow this link for the 6 Making Tax Digital consultations and for more information on having your say. The consultation period will run until 7 November 2016. There is going to be a programme of webinars and face-to-face events across the UK which will provide more detail on the consultations and an opportunity to ask questions and give feedback. The face-to-face consultations will be taking place on the 18th of October at the Manchester Copthorne Hotel - click here to reserve your place.
Rachel Murphy