Making Tax Digital - Are You Ready?




So, what is Making Tax Digital?

 

The primary aim of Making Tax Digital is to make the tax system more effective, efficient and easier for the tax payer to use. HMRC are rolling out the scheme in phases, so that the entire system is digitised by 2020. This digital system will effectively eradicate self-assessment and benefit the government/HMRC by significantly reducing overheads.

It will affect most tax payers from the self-employed, landlords and small businesses through to large corporations. This new system will require the tax payer or their agent to maintain digital records using compatible software. Genesis Business Systems works closely with Advanced Business Cloud Essentials and Pegasus, who both provide Making Tax Digital compatible software.

Making Tax Digital is rolling out in phases, so what are the deadlines?

This is the latest Making Tax Digital timeline, announced by HMRC on 13 July 2017:

From April 2019, quarterly reporting is:

  • Mandatory for VAT for all VAT-registered businesses with a turnover above the VAT registration threshold (currently £85,000)
  • Optional for VAT-registered businesses with a turnover below the VAT registration threshold (currently £85,000)

From April 2020 (at the earliest), quarterly reporting is:

  • Mandatory for income tax and corporate tax (as appropriate) for all businesses (including landlords) with a turnover over the VAT registration threshold (currently £85,000)
  • Optional for businesses (including landlords) with a turnover below the VAT registration threshold (currently £85,000)

Only those businesses with an obligation to file quarterly, are obliged to keep digital records. For all other businesses, this becomes optional.

Income Tax has been delayed, but HMRC are planning to implement it from April 2020, this will affect all tax payers.

Everything seems straightforward, so what’s the issue?

According to data sources from March 2019, although most business are aware of the requirements, only 55,250 business have registered for Making Tax Digital, while a further 13,472 have registered via agents. That leaves over a million business still to register. At the current rates of registration, only 402,000 additional companies would have registered in time for the first digital VAT submission on August 7th.

For a large proportion of small businesses in the UK (those with 10 or fewer employees), they will already be working with compatible software packages that may automatically update to be ready for making tax digital. For those that are still using pen and paper, outdated software, or old excel based methods, we strongly advise them to upgrade to a Making Tax Digital compliant solution. The cost is minimal, and could prove to be beneficial to the company, helping take the hard work out of tax returns, payroll, and day to day sales and invoicing.

Whatever your situation with Making Tax Digital, Genesis Business Systems, as accredited Advanced BCE and Pegasus partners, can help, so contact us at [email protected] or 01482 210999