Making Tax Digital – update

HM Revenue & Customs (HMRC) recently gave us some further insights into their plans for Making Tax Digital (MTD).  MTD is the new system whereby most sole traders, businesses and landlords with income of over £10,000 will be required to digitally report financial information quarterly to HMRC instead of completing Tax and Vat Returns. MTD is being phased in from April 2018.

• Although accounting records will need to be kept digitally there will not be a requirement for sales or purchase invoices to be kept in electronic format.
• Spreadsheets can continue to be used to maintain accounting records. However, the spreadsheet must be able to link into software that will report the necessary information digitally to HMRC.
• HMRC have said that they will not force people who are “Digitally Excluded” by reason of religion, disability, age or remoteness of location to comply with MTD. But there will be no set age limit for individuals being exempted from MTD.
• Free software will apparently be provided for the smallest businesses.
• There will be a soft landing for MTD and HMRC have said that they will not charge penalties for late MTD submissions for the first 12 months.

Please contact us if you would like a health check for your accounting system to ensure that it will be MTD compliant. We will be investing in software to ensure that we can assist our clients meet their MTD reporting requirements.

Read more about MTD on our dedicated website page making tax digital