The Brave New World of Making Tax Digital

JND Accounting in Nottingham are experts in the forthcoming digital taxation changes.

The next few years will see the ending of tax returns for:

- Self-Assessment
- Corporation Tax

But don’t cheer too loudly! Instead of submitting a return, businesses and individuals will have to submit their financial data to HM Revenue and Customs.

Get in touch with us for more information

Who does this apply to?

It will ultimately apply to:
- Limited companies
-Sole trader and partnership businesses
- Landlords with an annual rental turnover of more than £10,000

How will this be achieved?

The information will be uploaded though a portal to HMRC

How will HMRC use the information?

The official line is that they can make adjustments to tax liabilities and circumstances in real time. This is true, but there is little doubt that this will ultimately lead to the shortening of the interval between profit being earned and tax paid, probably leading to quarterly payments of income tax and corporation tax.

The availability of real time information will enable HMRC to target their enquiry activity more accurately.

What is the timetable for introduction?

The programme will be rolled out in stages:

1. From 6 April 2018. The initiative will be applied to sole traders, partnerships and landlords with turnover above the VAT threshold (currently £83,000) per year.

2. From 6 April 2019 VAT returns will be digitalised along with tax affairs of sole traders, partnerships and landlords with an annual rental turnover of more than £10,000, but less than the VAT threshold.

3. From 2020 companies will be included in the new regime.

What will be required?

It will be necessary to have an online account with HMRC.

It will also be necessary to maintain accounting records in a digital format.

The following will be regarded as acceptable formats for Making Tax Digital

1. Well known branded software e.g. Sage, Xero, Kashflow, QuickBooks
2. The software being developed for the purpose by HMRC
3. Spreadsheets, providing that they meet the criteria laid down by HMRC. (We do not know what these standards will be as yet)

What do I need to do?

We will be talking to all our clients in the near future to discuss how we can help them to comply with the new requirements.

Anything else?

After 6 April 2019, VAT registered businesses will have to upload their data as follows:

1. Each quarter for income tax or corporation tax
2. Each quarter for each digital VAT return

Potentially this could mean eight sets of data to be uploaded to HRMC, so it makes very good sense to ensure that the business VAT return periods are aligned with the business financial year end to reduce the number of submissions to 4.

Tax Returns

Are you looking for a reliable accountancy service by a dedicated accountant in the East Midlands? Contact JND Accounting in Nottingham today.

Call us now on 0115 987 7291

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