Legislation to introduce Making Tax Digital (MTD) will be included in the Finance Bill 2017 and despite many objections that it was too soon, the new system of quarterly reporting will commence in April 2018 for the self-employed and property landlords.
There were 1200 responses to the consultation documents issued in summer 2016 and a number of changes have been made to the original proposals.
Much of the detail will be introduced by secondary legislation and there will be further consultation on a number of measures but the key proposals are:
- Businesses will be allowed to use spreadsheets to keep their accounting records.
- Businesses eligible for three line accounts will be able to submit a quarterly update with only three lines of data (income, expenses and profit).
- Free software will be available to businesses with more straightforward affairs.
- Businesses will not have to make and store invoices and receipts digitally.
- There will be no late filing penalties in the first year of the new system.
The deadline for finalising taxable profit for a period will be the earlier of:
- 10 months after the last day of the period of account, or
- 31 January following the year of assessment in which the profits for that period of account are chargeable
Businesses and property landlords with a turnover up to £150,000 will be able to prepare accounts on a cash basis
Digital quarterly reporting for companies and larger partnerships will not be introduced until April 2020. These changes will have a significant impact on how you keep your business accounts and communicate with HMRC. Please contact us to discuss the impact of these changes on the way that you keep your accounts.