Update: After the recent snap general election and the ongoing ‘Brexit’ negotiations, the UK government has delayed the roll-out of making tax digital, however it doesn’t appear to be disappearing from their agenda. The scope of the changes are becoming more limited, so initially digital records will only be requried for VAT purposes. The dates here are subject to change further. We will always keep our customers updated with the latest information as we get it.
What Does Making Tax Digital Really Mean For My Business ?
Making Tax Digital is a new approach to collecting the information required by the HMRC and other government services in order for them to carry out their duties. Instead of filing a ‘year-end’ return, the new approach is to provide a constant (e.g. quarterly) feed of business data to the HMRC in order to provide a more real-time view of business performance and tax liabilities.
The most important thing to consider for a business owner, self-employed worker, landlord, or anyone else who will be affected is that their accountants are operating in a modern and effective way and are totally prepared for the introduction of Making Tax Digital.
We are proud to be recognised as Digital Accountants at Llewellyns. Whilst we have traditional values at heart, we are ready to embrace the changes. As part of our core team, we employ a government systems expert who has worked with the civil service on developing many large national software systems. This means that we will be able to best advise you on how to comply with the requirements of Making Tax Digital, but reap the benefits of using efficient software systems.
Making Tax Digital has recently been removed from proposed legislation so it can be debated after the upcoming general election. This doesn’t mean it’s going away, and we believe that using digital accounting systems will remain the future of accountancy and business in the UK.
Making Tax Digital - Timeline
Although this is the current timeline, the project is large and complex. These dates are subject to change by the HMRC and UK Government if necessary.
Making Tax Digital - Countdown
Although these are the current deadlines, the HMRC and UK Government may change the deadlines as the project progresses.
Turnover above £85,000.
Turnover above £10,000.
What Happens Then ?
Although the deadlines above may seem far off, implimenting MTD can take some time to get right, you may even need to learn some new skills. Don’t leave it to the last minute, speak to us now.
As our customer we will ensure that you have a system in place to satisfy the requirements of Making Tax Digital. We believe that as accountants it is our responsibility to make sure our customers are prepared for their deadline. Part of this work will ensure that you have the correct software in place to send your data to the HMRC at the correct time and with accurate details. There is no ‘one size fits all’ solution, but we will work with you on adopting the right approach..
Your responsiblity will be to keep accurate and detailed information, something which you are probably already doing. Many of our customers use online accounting software such as Quickbooks or Xero. These are excellent platforms to use in order to ensure you are keeping accurate digital records for your business. If you are not currently using a digital accounts package then speak to us and we will advise you on the best approach. It will no longer be approprate to keep written records and paper based accounts as these non-digital systems will not be able to communicate with the HMRC in order to file data.
How Do I File MTD Data?
This is a key question that cannot be answered until more information is made available by the HMRC. Our government systems experts explain that the HMRC will operate a system similar to the current PAYE RTI system that those running payrolls with be familiar with. In due course the HMRC will publish detailed technical documentation that will describe exactly the data they require, the format it must be sent in and the details of the ‘gateway’ that the information is sent through electronically.
As a customer of Llewellyns, you won’t need to worry about this. We will work with you to make sure that you are using a compatable system. If you currently use paper-based systems, we will work with you to ensure an easy transition to an appropriate software solution. If you’re already using software to carry out bookkeeping duties, we will make sure it’s ready to file the information when the time comes.