Digital Tax Accounts and Making Tax Digital
HM Revenue and Customs (HMRC) announced its new Making Tax Digital (MTD) in the March 2015 Budget but since then, there have been many consultations and changes in the implementation dates. The aim is for HMRC to be interacting digitally with all taxpayers.
When does it start & How would Making Tax Digital work?
MTD had been planned to start in April 2018. It will now start in April 2019 and only at that date for businesses with a turnover above the VAT threshold in order to meet their VAT obligations.
From April 2019, businesses above the £85,000 threshold have to provide their VAT information to HMRC through Making Tax Digital software. This software will not be provided for free by HMRC. The software will be offered by third parties and HMRC has no plans to endorse a particular provider.
Businesses will send summary data to HMRC about their business each quarter, or more often if the business prefers. The summary data will consist of total income and total expenditure.
So what next?
HMRC are inviting self-employed individuals and agents to join the Making Tax Digital (MTD) pilot for income tax. The aim being that taxpayers will see an estimate of how much tax they owe rather than waiting until the normal due dates.
HMRC have changed the timetable on a number of occasions and they are now adopting a wait and see attitude to see how the pilot scheme and the scheme for VAT registered business works in practice before implementing a scheme for others caught within the MTD net.
HMRC issued a Digital services update on 18 February. They are reporting that early testing is going well. They plan to release MTD-ITSA for income tax self assessment users from Spring 2018. They also mention within this update that all ATED returns for 2018/2019 must be completed online. They are also just about to comment a controlled trial for MTV-VAT from Spring 2018.
HMRC ran meetings on 6th and 7th March 2018 under the banner of ‘Talking Points’ on Making Tax Digital for business and what’s new for employers 2018. They have yet to release any substantial detail following these meetings. Here is a link to the blog.
HMRC will be hosting four sessions of an online agent talking points meeting: Making Tax Digital (MTD) – Signing up to the Income Tax Pilot on 26 and 27 April 2018. This webinar is set to explain how to sign up for an Agent Services Account, sign up clients for the pilot and submit quarterly updates for income tax using MTD Software.
The Croner Taxwise Making Tax Digital Helpline can provide you with unrivalled support.
Speak to one of our advisors today by calling 0844 892 2470 and selecting Option 5.