Making Tax Digital Quarterly Submissions

Quarterly Submissions:

How it Works

From 6 April 2023, all unincorporated businesses and individual landlords are due to enter the Making Tax Digital for income tax (MTD ITSA). This start date for everyone is due to the switch from the current year basis, to the tax year basis.

It is worth noting, there is a chance that Making Tax Digital ITSA will be delayed, or deferred for some taxpayers, as there are still unanswered queries in regard to landlords and partnerships.

 

What will you need to do?

If you are mandated into Making Tax Digital ITSA, you will have to make quarterly submissions of the totals digitally recorded during the quarter by the accounting system of:

  • sales income for each trade
  • purchases/expenses for each category

The categories of expenses are expected to be those currently required in the self-employment section (form SA105) and property section (form SA103F) of the SA tax return. When the final Making Tax Digital ITSA regulations are released we will know exactly what those expense categories are.

 

What is it and what is it for?

The quarterly submission is a rough profit and loss account. The taxpayer is not required to declare that the quarterly submission is a complete or correct reflection of the net or gross income of the business, as the submission does not contain an accuracy statement.

The quarterly submission is not a 3-month set of accounts, it is rough track to prove to HMRC that the business is keeping some near-to-real-time digital records.

The HMRC will take the figures reported in the quarterly statement and reflect back to the taxpayer an estimate of the tax they will need to pay for the year. This will not include any capital allowances or other tax reliefs.

Any errors included in the quarterly submissions can be corrected in the end of period statement (EOPS), which will include a declaration of accuracy.

 

Five tax returns per year

The first tax year to be affected is 2023-24. This runs from 6 April 2023 to 5 April 2024.

If you chose an accounting period that is co-terminus with the tax year your filing, below is an example of how it will work:

  1. The first report will be due in August 2023.
  2. The second report will be due in November 2023.
  3. Your Self Assessment tax return for 2022-23 (the previous tax year) will be due by 31 January 2024.
  4. The third report will be due in February 2024.
  5. The fourth report will be due in May 2024.
  6. The fifth and final year-end report will be January 2025.

Tax payments

  • The tax liability will need to be paid by 31 January of the next year (as is currently the case).
  • You will be allowed to voluntarily pay your taxes as you go: the detail is still being decided.
  • Eventually, it is possible that you will be required to make four payments per year on account of tax.

Penalties

  • There will be no late filing penalties for at least a year while the new system beds in. After that, you will suffer penalties if you file your returns late.
  • Penalties already apply for errors in returns or documents.
  • Late payment interest already applies.

 

If you have any questions or queries on the above, or would like to know how you can manage the changes, Speak to the Robinsons Team

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