Making Tax Digital Rules Now Clearer
The programme for phasing in Making Tax Digital became clearer following the Budget – smaller farm businesses have quarterly reporting to HMRC deferred says Jamie Younger of Saffery Champness.
Further to concerns raised during consultation, the UK Government has decided to provide 3.1 million small businesses in the UK with more time to prepare for Making Tax Digital. Unincorporated businesses including the self-employed that have annual turnover below the VAT registration threshold - currently £83,000 - will have an extra year before they are required to keep records digitally and send HMRC quarterly updates, although they will be able to start doing so voluntarily during 2017.
Those with an annual turnover above the VAT threshold will still be required to keep digital records and send HMRC quarterly updates from April 2018 and public beta testing of the system across a far wider sample will start, as planned, from April 2017. The exemption threshold, previously announced, will remain at £10,000.
Jamie Younger, Partner, Saffery
Champness, and a member of the
Estates and Rural Business Group, says:
The extension for unincorporated businesses with turnover below the VAT registration threshold is to be welcomed, but there is just over a year to go for larger businesses to get themselves ready for Making Tax Digital – a considerable challenge bringing most unwelcome additional red tape for business.
While VAT registered businesses already engage with HMRC on a quarterly basis online and are better placed to make the transition to keeping digital records and updating HMRC quarterly, the level of detail required on the submissions is likely to be much greater than that appearing on VAT returns.
There is an urgent need for HMRC to deliver targeted support, guidance and online training soon. The system must also be secure and robust when it comes on stream in April 2018.