“Making Tax Digital”: Quarterly reporting to HMRC from 2018 – be aware!

What You Need to Know About HMRC’s Quarterly Reporting Requirements

TAG Accountants explains how Making Tax Digital will affect your business and what you need to do to comply with HMRC’s new quarterly reporting system.

In our role as Tax Accountants to our clients we’ve been exploring the HMRC’s “Making Tax Digital” (or “MTD”) project. This system looks highly likely to result in much more information than is currently the case being sent online to HMRC by businesses.

As from April 2018 quarterly reporting of income and expenditure accounts will be introduced for some small businesses and landlords. Although it is true that HMRC are currently consulting on a number of proposals regarding the introduction of the new regime, as tax accountants we have serious concerns about the proposed timescale and the fact this new regime will be made immediately compulsory for those meeting the criteria.

Who does this affect?

At this stage, the new MTD proposals only apply to sole traders and partnerships with more than £10,000 of annual turnover with limited companies or their directors being covered in a later quite separate consultation.

MTD will require businesses to send summary data to HMRC about their business each quarter consisting of total income and total expenditure, with the expenditure itself broken down into categories such as motor expenses and advertising.

Each business will then have nine months after its year end to file an End of Year declaration finalising the annual figures. This is a month less than the current tax return filing deadline of just under 10 months after the end of the tax year.

HMRC has confirmed that they will not be providing their own bookkeeping / accounting software and that the use of digital record keeping software that updates a business’s digital accounts with HMRC will be mandatory unless you or the business are exempt from MTD.

HMRC hope software providers will develop “free to use” software. If you have any concerns about this, please contact us here at TAG Accountants.

HMRC is not planning to change the current payment dates, but under MTD, businesses may have the right to make “voluntary payments” towards their tax liabilities. Many Tax Accountants have doubts as to whether they will remain “voluntary” for very long!

So, in summary:

• Does MTD apply to you? If so how are you or your business going to comply with quarterly reporting regime? Do you have the time and skills to do it and what digital record keeping software are you going to use in order to comply with it?
• As HMRC will be receiving information from multiple sources, will your future quarterly returns generate anomalies and potential enquiries by them? Are you comfortable sending figures to HMRC or are you likely to need some help?

Speak to a tax accountant now…

As tax accountants here at TAG Accountants, we are up to speed on MTD and all its implications and after all April 2018 is not that far away! If you would like to discuss our Tax Services over us a free cup of coffee, just call us today on 01902 783172 or complete the enquiry form HERE and we will be delighted to hear from you.