Making Tax Digital - are we making progress?
There is evidence that HMRC’s Making Tax Digital (MTD) implementation team are working with advisors and their clients to beta test the computer systems that will drive the quarterly upload process when it is timed to begin April 2018.
For those who may have missed our previous updates on this topic, MTD aims to have taxpayers’ income and other relevant details uploaded to a personal digital account. When completed, this new system will eventually remove the necessity of a formal tax return each year.
Banks, employers, pension providers and business owners (including landlords) will have an obligation to upload data to HMRC. The information gathered will allow for the estimation of future tax liabilities in real time.
For business owners and landlords this is quite a change from the present annual tax return. At various implementation dates they will be required to make quarterly, summarised uploads of their accounts data and undertake an annual online check.
At present, HMRC is not providing direct access to taxpayers to comply with their MTD obligations; instead, business owners will need to use accounting or other software that is authorised for this purpose.
The present timetable, when businesses will need to start uploading data, is:
- April 2018 – the self-employed, including landlords, with turnover in excess of the VAT registration threshold, presently £85,000.
- April 2019 – the self-employed, including landlords, with turnover below the VAT registration threshold.
- April 2019 – submission of VAT returns
- April 2020 – companies and other organisations subject to Corporation Tax.
Businesses with income below £10,000 will be excluded from the MTD quarterly upload processes.
Incredibly, the legislation setting out the rules and regulations for MTD has still not reached the statute books. It was included in the Finance Bill 2017, but the relevant sections and schedules dealing with MTD were deferred for consideration until after the recent election. Professional advisors, software providers, and the business community looks forward to some progress in this area. Presumably, the deferred legislation will reappear in a summer Finance Bill.