Making Tax Digital Factsheet
Making Tax Digital (MTD) is the most fundamental change to the administration of the tax system for at least 20 years.
The essential elements for businesses and landlords are:
- Paper records will no longer be sufficient: It will become mandatory for almost all businesses and landlords (self-employed, partnerships and limited companies) to use software or a spreadsheet to keep accounting records. Paper accounting records will cease to meet the requirements of tax law.
- Quarterly reporting: There will be a requirement to submit updates to HMRC each quarter directly from accounting software, within one month of the end of each quarter.
As your accountants we will support you through these changes and provide the ongoing services that you need. However, the changes are so fundamental that it will be necessary to review your current record keeping systems and to reconsider what work you decide to do yourself and which activities you wish to include in the service we provide.
When does it start?
If you are a VAT registered business, from April 2019 you will need to start submitting your VAT returns directly from accounting software. The current online VAT return will cease to be available.
What are the exemptions?
The smallest businesses and landlords with gross income of less than £10,000 will be exempt. Also exempt are those who are not able to engage digitally for religious reasons or due to a factor such as age, disability or location (eg, no availability of broadband).
What do I need to do now?
The action required depends on the size and structure of your business and how you currently keep your records – we will need to discuss your transition to MTD with you.
- Consideration may need to be given to the possibility of an exemption.
- If you currently use accounting software it will need to be upgraded. If you are considering acquiring software or joining the pilot, please discuss this with us first.
- If you currently maintain records on paper or a spreadsheet, your processes will need to change. You will need to make your own quarterly submissions to HMRC or provide records to us promptly after each quarter-end and engage us to do the bookkeeping and quarterly reporting.
Where can I get further information about these changes?
You can contact the partner or manager you usually deal with for you and your business, or alternatively if you are not an existing client but would like more information, please contact: