3rd January 2017
Making Tax Digital - a brief guide for all businesses
- Author: Anne Simmons
- Published: 5th April 2017
- Categories: Blog, Business, Clanfield
Author: Anne Simmons - Ledgerworks Ltdhttp://www.clanfieldonline.com/26/309/ledgerworks-ltd
Making Tax Digital is a key part of the government’s plans to make it easier for businesses to get their tax right and, the end of annual tax returns.
At the Spring Budget 2017 the government announced that it would provide 3.1 million small businesses with an extra year (until 2019) before they are required to keep digital records and send HMRC quarterly updates. However, Making Tax Digital is what all businesses need to be thinking about and planning for in 2017/18.
HMRC reasons for Making Tax Digital
1. Better use of information
Making Tax Digital will mean that businesses will not have to give HMRC information that it already has, or that it is able to get from elsewhere e.g. other government departments.
Digital tax accounts for all will mean that businesses can see the information that HMRC holds and be able to check at any time that their details are complete and correct.
2. Tax in real time
Businesses should not have to wait until the end of the year or longer to know how much tax they should pay. HMRC will collect and process information affecting tax as close to real time as possible, to help prevent errors and stop tax due or repayments owed building up.
3. A single financial account
Businesses, at present, cannot see a single picture of their liabilities and entitlements in one place. HMRC hope this will change by 2020.
4. Interacting digitally with businesses
Businesses will be able to interact with HMRC digitally and digital record keeping software will be linked directly to HMRC systems, allowing businesses to send and receive information directly from their software.
What does this mean for Businesses
HMRC hopes that by introducing quarterly submissions of data that it will reduce errors and give businesses a clearer view of their tax position.
HMRC have said that there is no question of forcing those businesses who cannot go digital to do so. HMRC will ensure that there are alternatives for those who genuinely need them.
These changes are being introduced gradually, starting in 2018 with Income Tax for businesses, self-employed people and landlords with annual turnover above the VAT threshold. In 2019-20 they will extend the Income Tax elements of Making Tax Digital to all businesses, self-employed people and landlords with annual turnover above £10,000. They will then move on to VAT (2019) and Corporation Tax (2020). These time scales have been extended to give businesses time to prepare and adapt. Free software will also be available for businesses with straightforward tax affairs.
The government has already pledged to remove the smallest businesses, self-employed people and landlords from the scope of the changes by exempting all those with annual turnover of less than £10k from digital record keeping and quarterly updates (although they can still choose to enroll).
If you are concerned that you will not be able to do your vat returns or other bookkeeping, then let Ledgerworks Limited help you.
Contact us today: 07767 610478 or firstname.lastname@example.org
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