I cannot think of a single year during my career where Government or Professional Bodies haven’t introduced radical changes. This is sometimes borne out of a real necessity but sometimes it feels like the rule makers have nothing better to do than to tinker with our working lives. In general practice, it means that accountants always have to make sure that we keep up to date with HMRC, Companies House and the Professional Standards Boards.
You may have seen Making Tax Digital (“MTD”) mentioned in the press. Make no mistake, despite delays and postponements for General Elections and Brexit, this is coming for us all that are in business or have income from multiple sources.
The first wave of MTD hits us in April next year, just a few months away now, with VAT returns for all businesses having to be submitted through recognised software. Every VAT registered business will need to effectively move its online registration to be linked to its business software.
Many of our clients don’t use software in their business so in order to help them meet the new requirements we will introduce these businesses to our central portal for data collation and submission with the aim of making our clients’ experience as smooth as possible.
What is of more concern though is the proposal that MTD will be introduced for individuals that complete a self-assessment tax return either because they are self-employed, or they have untaxed income in the form of property rental or possibly even dividends.
The current information from HMRC on how this will be implemented is sketchy. At present some tax payers are piloting this change and these are the guinea pigs that will iron out the wrinkles. HMRC’s stance on this introduction is that it will remove errors in posting information onto tax returns and therefore lead to the right amount (more) of tax being paid. We hope that all will be made clearer closer to the time of introduction.
My main concern is that once this is introduced as a replacement for annual tax returns, we will have four times the amount of work to do. If you are a tax payer with a rental property, you will have to submit, digitally, all your income records to HMRC four times a year and reconcile the tax you have paid annually. This just seems like more work rather than less.
Many of our clients bring their information to us so we can file this information once a year. We now must start planning to do this through a digital channel and work more efficiently so HMRC can achieve its objective of being one of the most digital advanced tax administrations in the world.
For more information on making tax digital please visit HMRC’s website and search on the Overview document. Alternatively, come see us at Mostons where we are ready for the change.
Wishing everyone a very happy Christmas and a prosperous and healthy 2019.
Mostons Chartered Accountants