HMRC have published a series of consultations during August 2016 that all relate to the so-called Making Tax Digital (MTD). Certain pundits are already signalling that MTD is as significant a change as self-assessment.
The titles and links of the consultation documents are set out below:
Making Tax Digital for Business – An overview for small businesses, the self-employed and smaller landlords
The proposed changes, if they are all enacted, will transform practice compliance activity. Potentially, we may see the end of tax return filing, it will be replaced by a continual process of uploading data to HMRC portals.
Practitioners with clients who are still resisting computerised accounts may need to think again. Practitioners who do not promote the use of cloud based accounting software to clients do not have long to get their house in order. Some of the changes are timed to commence April 2018 – a mere eighteen months away.
Whilst past efforts by HMRC to shift systems into electronic formats have been beset by setbacks and delays, can we afford to delay planning for MTD if, as it seems, there is real momentum in the process this time?
The list of changes is eye-watering: quarterly upload of accounting data for all businesses, running totals of tax and NIC due, the ability to make payments on account based on these running totals, the end of SA return filing, a push by HMRC to encourage more traders into simplified cash accounting. The data upload will include property businesses (including buy-to-let, holiday lets and other income from property sources).
Best to be prepared. Make sure your CPD includes MTD content…