Aside from the need to consider the realignment of basis periods for self-employed clients and minimising the effects of the Corporation Tax hike next year, a major challenge for practitioners will be ‘getting ready’ for MTD April 2024.
Initially, it will only affect targeted self-employed traders and unincorporated property businesses, the aptly named MTD for Income Tax Self-Assessment group, but MTD for Corporation Tax will be hot on its heels.
Practitioners will be eyeing their self-employed clients (including landlords) and wondering how they will convince them to convert their plastic bag bookkeeping into a format that will synchronise with HMRC’s servers from April 2024.
Affected clients, who presently take compliance services will be unimpressed that they are required to digitise their record keeping and make five effective returns of their trading transactions to HMRC each year.
The notion that the need for a self-assessment tax return may disappear may ease the blow but practitioners will need to figure out how they agree terms if, as is likely, they will have to check affected clients’ records each quarter from April 2024.
Practitioners could kick the ball down the road and consider – for appropriate clients – incorporating self-employed landlords and other business clients before the April 2024 deadline. No date has yet been agreed for MTD for Corporation Tax, but it is unlikely to be mandated before April 2026.
This sea-change in the way that business owners will be reporting to HMRC bears attention sooner rather than later. Notwithstanding the issue of clients’ lack of enthusiasm for paying any additional professional support, this post, written May 2022, is twenty-three months from the April 2024 deadline.
MTD will undoubtedly be the major challenge for practitioners as the months countdown to April 2024.