Chartered Tax Advisers & Accountants
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The idea of Making Tax Digital was first mooted in the 2015 Autumn Statement with the announcement that the Government wanted to replace the annual tax return with some form of quarterly accounting for the self-employed, landlords and partnerships. Limited company obligations would also follow.
The Government's consultation on Making Tax Digital closed on 7 November 2016 and M&S submitted their responses to these consultations on 4 November 2016. Final decisions regarding the consultation were announced in February this year amidst growing concern as to how this would impact the self-employed.
Since the initial announcement the start date for Making Tax Digital has been delayed and now looks set to be phased in from April 2019.
As this is something M&S are deeply concerned about and interested in, we keep a watching brief on developments and government announcements and will provide updates as and when further announcements are made.
We hope the information in this page will prove useful to you but if you have concerns as to what these changes might mean for you or your business please contact Stewart McKinnon, Tax Director or by emailing makingtaxdigital@msactax.co.uk
Probably against my better judgement, I’ve agreed to take part in HMRC’s pilot to help them evaluate the MTD software that will become essential for most small businesses to use to complete their quarterly tax “returns” (sorry, submissions, we’re not doing tax returns now, no siree), from April 2018.
As might have been expected, HMRC chose the busiest day in a tax adviser’s year (and football’s transfer day deadline) to publish what is to happen with Making Tax Digital, following a record breaking number of responses (over 3,000, more than 20 times the average) to the consultative documents in November last year.
The 2016 Autumn Statement marked the first statement delivered by Chancellor Philip Hammond but, despite this, served mainly to confirm old news that changes already announced would take place, rather than introduce anything significant.
In terms of tax announcements we can only describe it as
Nothing at all on Making Tax Digital despite previous commitments. A more detailed analysis of the few changes announced will follow shortly.
(continuing the diary of a small businessman and his attempts to understand our tax system)…
On the back of the proposed change to make a large swathe of businesses submit tax returns quarterly rather than annually as at present, one of our clients conducted a survey to investigate this further. M&S also circulated this survey via our mailing list and, while not statistically significant, the results were interesting, revealing that a lot of people didn’t know much about what was happening.
On August, 15, HMRC announced the results of the consultation process on their proposals to radically alter the tax system. The result was; another consultation! More specifically, they published a further 250 pages of thoughts on Making Tax Digital (on top of the videos, etc. already produced) with the new consultation running to 7 November 2016.
‘Making Tax Digital’ is a new approach proposed by HMRC to the reporting of business accounts so that the correct tax can be collected. In essence, rather than the annual requirement to submit a tax return, HMRC now wants a return to be done once a quarter, although the tax due will only be paid annually as at present. Businesses, of all types will have to use compatible software to keep their records, and they will, in most cases, need to pay for this software. As awareness of these changes grows, it is starting to cause many business owners some concern.
Over a month after they expected to issue an update on Making Tax Digital and the changes being considered to the tax system for sole traders, partnerships and limited companies in the UK, HMRC has today done so.
One of our clients is carrying out a survey (independent of ourselves) to ask self-employed businesses if they know about the proposed changes by HMRC to self assessment tax returns and what, if any, problems they will cause. The survey, which can be accessed by clicking here, only takes a few minutes to complete and we’d be grateful if you would help with this. We will be able to get access to the results and report them back to you later this year.