To make it simpler for you to meet your tax obligations, HM Revenue & Customs (HMRC) will be introducing quarterly updates for many businesses, self-employed professionals and property landlords.
This change is intended to help you better keep track of how much tax you owe – or how much you are due back – throughout the financial year.
The project’s biggest change will be to replace the annual tax return with quarterly reporting from April 2018 for small businesses and individuals with a turnover above the VAT threshold of £85,000. There will also be the requirement for an annual reconciliation to be made no later than 10 months after the end of your accounting period.
Why is HMRC introducing this?
· - Accurate Tax Information: Replacing paper-based bookkeeping with digital tax accounts will let you check the information HMRC holds about you is 100% correct.
· - Reduced Errors: Making Tax Digital’s new reporting function will allow HMRC will to look at your tax information almost immediately, reducing human error from data input.
· - Easier to understand: HMRC anticipates taxpayers will better understand how much tax is owed within the digital tax account – much like online banking.
· - Easier contact with HMRC: Making Tax Digital will make it easier for you to contact HMRC online via webchats and secure messages.
When will it affect me?
HMRC will gradually bring these changes in once it completes a pilot scheme that began in April 2017:
April 2018 – Quarterly reporting starts for businesses with turnovers more than the VAT Registration Threshold of £85,000
April 2019 – Quarterly reporting starts for businesses with turnovers below the VAT threshold of £85,000. Digital quarterly reporting for VAT also begins
April 2020 – Quarterly reporting for companies introduced
Please be aware that the above dates may be subject to change after Making Tax Digital was removed from a revised Finance Bill 2017 due to the snap General Election on 8th June.
Here to help:
Your local TaxAssist Accountant will work with you to prepare for Making Tax Digital. As small business owners ourselves, we fully understand what is required to manage your business records digitally. At TaxAssist Accountants, we've spent a great deal of time training and developing the right support services to help small businesses through this period of change. HMRC will not be offering software to help you report quarterly, so we have already partnered with Intuit QuickBooks to help make managing your accounting records easy, wherever you are.
The information provided above is based on current guidance from HMRC and may be subject to change. Please consult with your local TaxAssist Accountant before taking any action.