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Making Tax Digital

Making Tax Digital (MTD) is a plan by HMRC to make reporting of taxes for individuals and businesses easier and in a near real time regime which PAYE is currently working under.  This will be done as a digital submission through MTD-compatible software and all registered taxpayers should now have a digital account with HMRC to be ready.  The MTD-compatible software is expected to include the market leaders like Xero, Quickbooks, Sage including Sage 50 desktop version 24 and above. 

 

Initial Implementation
From 1 April 2019 MTD will be brought in for all VAT registered businesses with taxable turnover more than £85,000.  This will affect all entities who meet both of these criteria whether they are a  sole trader, partnership, limited company  or a charity.

Corporation tax will eventually fall under the MTD regime from an expected date of April 2020 with quarterly submission to HMRC being made digitally.  All other non-corporate businesses with taxable income greater than £10,000 and less than £85,000 will eventually come under MTD but this is not expected until April 2020 at the earliest although they can volunteer to opt in.

MTD is in progress as we speak and this is being done through testing with various volunteers and has been done since late 2017 with HMRC looking for further volunteers to participate during 2018 before the implementation date.

 

Exemptions

MTD does exempt certain businesses from maintaining online submissions, these include:
  • Businesses or organisations that cannot use computers, laptops, etc due to their members religious beliefs;
  • Due to practicalities of using computers for digital submissions like age, disability or remoteness, which does not allow a broadband connection;
  •  At present, income tax registered businesses with taxable income less then £10,000 (this is still be confirmed by HMRC)

 

MTD here to stay
All tax registered businesses with the exception of those listed above will have to comply fully with MTD by the implementation dates set by HMRC.  The quarterly returns for income and expenditure will replace the current system for submission of corporation tax returns and parts of the self-assessment returns.

What you need to do
With the implementation date for digital VAT submissions in the now not too distant future you need to ensure that you are using compatible software which will allow digital submission for both VAT Returns and submission of income and expenditure along with tax computations.

In order to make digital submissions of VAT Returns the software will require you to be able to keep data on all purchase and sale invoices which make up the figures shown on your VAT Return so that HMRC can review these if required.  Care needs to be taken when using bespoke software as the detailed information is required to be held within the compatible software and can’t be monthly or quarterly total.

How we can help
Alexander Sloan would be glad to help you assess your requirements be it, ensuring your current software is compatible and approved by HMRC or full implementation of software. For further information please contact your normal contact at Alexander Sloan or Stuart Adamson and Nicola Haddow in our Accounts Department who would be pleased to assist you.

New tax Partner appointed at Alexander Sloan

17th January 2017

Carole Connor has been appointed Tax Partner at Alexander Sloan, one of Scotland’s longest established firms of Accountants and Business Advisers which celebrates its 150th anniversary in 2017.

Read more


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