News - Making Tax Digital
20 January 2017
Making Tax Digital is on its way, there is no doubt about this. But when? Making Tax Digital is the biggest change to the tax system in a long time and will have a major impact on small businesses. Reporting to HMRC on a Quarterly basis from April 2018 will impose a significant burden on many businesses. But will it actually happen from April 2018?
In November, I attended a Conference in Twickenham where all the major players involved where present. Making Tax Digital was hotly debated. Representatives from HMRC, ICAEW (Institute of Chartered Accountants in England & Wales) and the ACCA (Association of Chartered Certified Accountants) put forward their viewpoints on how they believed Making Tax Digital would play out.
From listening to all sides putting forward their points it was clear to me that Making Tax Digital is going to happen but the Accountancy Profession believed that the timescale of implementation from April 2018 was not achievable and would put undue stress on many businesses. Overall I got the impression that people accepted that there were benefits to the new changes but the April 2018 start date was far too soon and the level of businesses being targeted was unrealistic.
It has been very interesting to read the recent Treasury Committee Report that has been published which states that they believe that the start date should be delayed. Their report I am sure will be greatly received by Accountants and business owners! They also believe that the threshold for reporting under Making Tax Digital should be no less than the current Vat threshold of £83,000. They believe that an initial threshold of £10,000 holds little justification.
So….where do we go from here? The report will be reviewed and hopefully a decision will be made soon on when this will all start. April 2019 or April 2020 will be the likely new date if the plans are revised I suspect, but we will wait and see what the decision is and also if the threshold will be revised. Small businesses struggle enough as it is with their administration burdens, hopefully a revised approach agreeable to all will be implemented.
Oh and before anyone asks……will Quarterly Reporting mean you have to pay tax each quarter? The answer is “No” but……you can make voluntary payments each quarter. And failure to digitally file your Quarterly figures?…..HMRC will impose penalties!
For any more information on how Making Tax Digital may affect you then please do not hesitate to contact us.