Making Tax Digital Update- 24th February 2017
On 31st January 2017, HMRC published documentations in respect of its intention to bring in the digital reporting for businesses. As you are aware Tax Returns are completed each year and have to be submitted to HM Revenue and Customs within ten months of 5th April.
The Government in conjunction with HMRC have now announced that businesses, self-employed people and landlords will be required to submit quarterly returns as follows:
· April 2018 I if they have profits chargeable to Income Tax and pay Class 4 National Insurance contributions (NICs) and their turnovers are in excess of the VAT threshold
· April 2019 if they have profits chargeable to Income Tax and pay Class 4 NICs and their turnovers are below the VAT threshold
· April 2019 if they are registered for and pay VAT
· From April 2020 if they pay Corporation Tax (CT)
Businesses, self-employed people and landlords under £10,000 are exempt from these requirements.
Those in employment who have secondary income of more than £10,000 per year through self-employment or property will also be required to use the digital service.
At this moment in time, there is a lot of debate as to how this information will be transferred to HMRC and there is still much discussion and various views as to whether or not the new procedures will actually work in reality. At this moment in time we cannot be more specific as to the mechanisms of the procedures as these are not known, but we will keep you advised of developments as and when they are established. Whilst the new proposals seem an administration headache, it is likely that simple quarterly figures will be submitted with a Reconciliation at the year end when preparing the detailed accounts as normal.
If you wish to discuss any points that have been raised please do not hesitate to give us a call on 01904 612 455.