Making Tax Digital -Are you ready?
(Next seminar date to be confirmed)
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 organisations are:
- Paper records will no longer be sufficient: It will become mandatory for almost all businesses and organisations (self-employed, partnerships; limited companies and others) to use software or a spreadsheet to keep accounting records. Paper accounting records will cease to meet the requirements of tax law.
- Returns and quarterly reporting: There will be a requirement to submit VAT returns and income tax updates (quarterly and annual) to HMRC, directly from software.
As 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?
VAT: If your business is registered for VAT and your turnover is above the VAT threshold you will already be required to keep digital accounting records and to file your VAT returns using MTD compliant software. however the next stage will see non-VAT registered businesses needing to apply this new filing system.
Income Tax (self-employed, partnerships, trusts and landlords who compete Self-Assessment tax returns): MTD is to become mandatory for income tax reporting, but not before 2021. Pilots of MTD for income tax have already started. We can show you the benefits for making an early transition to compliant software.
Corporation Tax (Limited Companies): The timings for MTD for corporation tax have yet to be confirmed but it will not become mandatory before April 2021. Moving to a digital system can have added planning benefits for your business, reducing risk and allowing instant in year reporting.
What are the exemptions?
There are exemptions for those who are not able to engage digitally for religious reasons or due to a factor such as age, disability or location (e.g. no availability of broadband). These exemptions are the same as the current exemptions for VAT online filing.
When MTD for income tax becomes mandatory there will be an exemption for businesses and landlords with a very small turnover; the level of this exemption has not been set.
What do I need to do now?
Let us here at Arubus Accountants make this an easy transition for you and your business, we can show you the all of the many benefits of embracing the regime and updating your business systems by joining us at our FREE event:
(Next seminar date to be confirmed)
We will be on hand to provide you with all of the necessary information on MTD, along with our guests from Xero and Sage offering expert advice and answering all of your questions.
It is important that we discuss your transition to MTD with you so that you are ready for MTD reporting for VAT by Spring 2019 and also consider the transition for other taxes.
- We may need to consider the possibility of a digital exclusion 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 and let us help you choose the right software for your business needs.
- If you currently maintain records on a spreadsheet you will need to acquire software which will allow returns and updates to be made directly from the spreadsheets, upgrade to an alternative software, or engage us to do this work.
- If you currently maintain records on paper your processes will need to change. You will need to provide records to us promptly after each quarter-end and engage us to do the bookkeeping, quarterly and annual reporting, or acquire and use appropriate software.
Call: 01242 224886