You may have heard about Making Tax Digital. It’s the UK Government’s scheme to move all personal and business tax administration online. Beginning this year, and due to be completed in 2020, anyone who needs to file a tax return or deal with business tax will be impacted by Making Tax Digital (MTD).
And this week the government has made further announcements on the time frame and requirements for MTD. In the immediate future you don’t need to take any action but it does always pay to be aware of developments.
Commencing in 2018, you’ll be able to start saving digital records and it’s expected that by 2019 this will be compulsory and penalties will begin to be issued, aside from some specific exceptions.
One new aspect of MTD that was announced this week confirmed that digital records could be uploaded and submitted to HMRC in a spreadsheet format and not just via an online form.
One aspect of MTD that’s new, and controversial, is that you’ll be required to update your records on a quarterly basis. So rather than filing a single annual return, you’ll need to sorting similar at least four times a year. For many this will seem like a needless burden, but others will welcome the opportunity to keep on top of record-keeping and the like. Certainly it will take a bit of pressure off accountants in January as the 31st deadline for the previous year looms. Of course, you can do it every week or month if you feel moved to.
Another interesting development is that HMRC will also offer a new pay as you go option (PAYG) to help you keep on top of your tax affairs. This will be voluntary but all new options to help people are very welcome.
A few aspects of the changes are still out to consulatation. Whilst you likely won’t have to make quarterly payments (although some businesses already do), you can opt to. But it’s not currently clear how the personal tax free allowance will be allocated. Will it be spread over the year or can you enjoy it for the start of the year only as you PAYG?
Obviously for people who have not embraced the internet and technology this will be a daunting step (but it looks as though some allowance will be made) it’s clearly the way the world is going and it does present a whole lot of benefits. It also recognises that there is something fairly old-fashioned about having a single deadline for al people to file their tax return and as that deadline looms the technology inevitably starts to creak. This should take some pressure of the technical infrastructure.
10 Responses
This needs to be linked to your business bank account for smaller companies and sole traders. This way there wouldn’t be any submitting, just live submission to HMRC. That’s the real way forward.
You can click an option on a drop down to say what the transaction is for (stationary, travel, etc). As long as you use the single account for both income and outgoings then this would work out much simpler.
Yet for those with multiple accounts and cash flow, the alternate more complicated 5 yearly (4 quarter and 1 final) submissions might be needed.
This was one of the late and not much lamented George Osborne’s parting shots.
It’s a pointless knee jerk reaction to the pressure to get more money in from small businesses.
Forget your multi-nationals, squeeze the hard working, over-taxed, over-regulated self employed.
Those evading tax don’t even submit tax returns. Why not go after them? Answer – it’s too much like hard work for HMRC who, as well as being required to get in more tax, have seen a cut in their resources at the same time. Go figure.
All this will do is multiply the hassle of tax returns TIMES FOUR.
Thanks a bunch, Osborne and the illiterate non-entities now running/ruining this country.
And by the way, when is this austerity Cr*p going to end?
If you’ve got children under 10, they’ve never known anything but cutbacks and austerity.
I guess Peter must have leapt from the womb as a fully formed adult, completely by-passing the childhood stage.
Having read the HMRC page on this, it’s clear that businesses with face more frequent tax enquiries.
One section mentions businesses being chosen at random by the system which will all be subject to a full enquiry. There were will be no discretion, if you win this particular lottery, you will get the FULL treatment and they’re probably on incentives to impose penalties to cover their costs.
This means a full shakedown of all records going back up to seven years.
We had this tea party inflicted on us a couple of years back and it was horrific.
Even if you think your paperwork is complete, they will find something. Like the police stopping a car – if they want to nick you they will find a pretext.
Quote from above : “One new aspect of MTD that was announced this week confirmed that digital records could be uploaded and submitted to HMRC in a spreadsheet format and not just via an online form”
Yes but in what form of spreadsheet format? Will they insist that everybody uses say Microsoft Office and they’ll only accept Excel files? Apart from being seen to favour one commercial organisation over any other that would put them at odds with a great many sole-traders or smaller SME’s as they are more likely to be using more competitive, if not freely sourced, alternatives . . just as efficient but without the big price tag.
Anyone any information on this . . . or have HMRC not even thought of it yet.
According to the parliamentary debate for the online petition against these changes, some businesses my be able to fill in just three boxes each quarter.
Apparently businesses over £10 million turnover won’t be asked to do this until at least 2020, so why hit the rest of us with this nonsense?