19th October 2018
The Making Tax Digital (MTD) project has just taken a step further towards full implementation. On 16th October HMRC announced that it was opening up its initial limited trial of the new system of digital tax reporting to a further 500,000 businesses.
Although in our September article ‘Getting ready to make tax digital’ we commented on the government’s plans to open up the pilot later in the year, it’s fair to say that the timing of the announcement came earlier than expected. So much so that speakers at a MTD conference arranged by the ICAEW (Institute of Chartered Accountants in England and Wales) the day before were merely predicting that the announcement may be ‘fairly imminent.’
In recognition of the potential complexities of the MTD system HMRC is continuing the cautious approach which saw it pronounce that in the initial phase MTD will only apply to those businesses with a taxable turnover in excess of £85,000 and which are registered for VAT.
In line with this approach businesses now being invited to join the pilot are only those sole traders and companies whose VAT records are up-to-date and straightforward. So if you have incurred a VAT surcharge in the previous twenty-four months, trade with the EU, use the VAT flat rate system, or are newly registered for VAT then you’ll have to wait a bit longer before getting to grips with the new system.
That’s not to say that you can put MTD into the mañana basket on your desk. It may be a cliché to say that failing to prepare means being prepared to fail but MTD isn’t going to go away. With the latest HMRC timetable predicting that businesses in the group listed above will be invited to join the pilot from late 2018/early 2019 the best advice we can give is that the sooner you have your digital tax ducks in a row the better.
That applies even to those with more complex VAT scenarios. Recognising that they may require further time in order to adapt their systems HMRC have also announced that the implementation date will be pushed back six months to the 1st October 2019 for the following businesses:
“trusts, ‘not for profit’ organisations that are not companies (this includes some charities), VAT divisions, VAT groups, those public sector entities required to provide additional information alongside their VAT return (such as Government departments and NHS Trusts), local authorities, public corporations, traders based overseas, those required to make payments on account and annual accounting scheme users.”
Commenting on the making tax digital project Thompson Jenner LLP partner Jon Westley said “we cannot over stress the importance of getting to grips with this fundamental change in the maintenance of business records and submission of statutory returns. In order to help our clients to understand the challenges facing them Thompson Jenner is running a series of MTD for VAT seminars with the next being in Exeter on 30th October.”
The next free seminar will be at the Buckerell Lodge Hotel, The Garden Suite, Exeter, EX2 4SQ, on Tuesday 30th October 16.30 – 17.30. Please book your place online at: Exeter MTD for VAT seminar
If you would like to find out more or meet to discuss the MTD and cloud accounting services which we are able to provide, please contact Jon Westley or one of our Partners on 01392 258553 or 01395 279521 to arrange a free initial meeting.