Although the proposed roll out of Making Tax Digital was recently removed from the Finance Bill, it is very much believed that this was a political measure as part of the upcoming General Election, and will swiftly be added back in once we find out which party is elected. After all, why would the government need to budget for something if it didn’t exist?!
Making Tax Digital (“MTD”) will begin its roll out from April 2018, with the objective of having all businesses, including the self-employed and landlord, maintaining digital records of the finances and sending quarterly summaries to HMRC.
There are exemptions from joining MTD, but these are very limited. Overall, we would expect all our clients to prepared to begin digital reporting from their deemed start date.
The key question is……
When will this affect you?
This is all dependant on your circumstances, but we have set out below the guidelines of when you should be prepared to report digitally to HMRC.
Landlord & Self Employed Businesses – April 2018
VAT Registered Businesses – April 2019
Limited Company (subject to Corporation Tax) – April 2020
A review of our client base has identified that 26% of clients will need to be ready to begin reporting in April 2018. And of the remaining clients the vast majority will need to commence from April 2019.
What do I need to do?
In all honesty, there is no guidance yet on how businesses are going to submit this data to HMRC. This makes it hard for us to give specific advice on changing your business practices to ensure that you are able to report within the MTD framework. However, given the emphasis on digital data, along with industry inside knowledge, we are able to give the following guidance:
Financial Reporting System
If you do not currently have a robust method of keeping track of your income & expenditure, be prepared to implement this, and quickly.
Our preference here would be the use of cloud technology. Our preferred vendor is Xero, and we use this software both in house & with a large proportion of our client base. Xero are very much involved in the development of MTD, from a technology standpoint, and are therefore best placed to create a solution to meeting HMRC’s requirements.
If you feel that you have a suitable system in place, make sure that it is capable or completing the reporting required. If you are using a product such as Sage, or maintaining records on Excel, please get in touch so that we can review your system to ensure that you are setup to report correctly, or advise on how you can best convert to a more suitable product.
The roll out of MTD is a huge change in the landscape of financial reporting for all businesses across the UK.
Once you have passed your deemed commencement date HMRC will be expecting quarterly returns from you, and as with all returns that HMRC expect, there will be penalties for late or non-submission.
Unfortunately, you cannot afford to bury your head in the sand and hope that this passes.
Can we help you?
We are offering all local business, whether they are clients or not, an appraisal of their existing systems. From there we can advise on measures to take prior to MTD reporting commencing for your business.
Why are we best placed to help?
Numbers (UK) are an entirely cloud based accountancy practice based on Plymouth, Devon. We are Xero Gold Partners, and have advised a wide spectrum of businesses on the use of cloud financial technology. This ranges from individual sole traders to £multi-million turnover businesses with 40+ employees.
Our expert team are all Xero Certified Advisors, and the practice is a members of Sage’s accountants club. We also love using FreeAgent, another great cloud based package.
We can convert data from any existing accounting package across to a more MTD friendly alternative, as well as provide in-house training to your entire team following the move.
All of the above allows us to review the future impacts of MTD on your business, and propose measures for you to take to ensure that you are setup and ready to go without receiving any nasty surprises.
If you would like to take advantage of our free appraisal please drop us an email at MTD@NumbersUKLtd.com, or call the office on 01752 226084, and one of our team will be delighted to help.