Another Twist In The MTD Tale: Where Are We Now?
In our previous blog this year on Making Tax Digital (MTD), we compared it to a weapon, one that’s going to cut to the heart of our financial management skills. So it may not surprise you that, just as a top-secret programme goes through tweak after tweak, the whole scheme has changed once again.
HMRC announced new measures in July for what we can expect. To bring you up to speed, Nabarro Poole is here to walk you through the latest changes to MTD. Keep reading for an update on our digital tax system.
A staggering pace of adjustment
First – a quick reminder of where we’ve already been with MTD. Announced in George Osbourne’s last Spring Budget, this overhaul to UK tax practices was mooted for launch in April 2018. But Westminster has experienced plenty of turmoil since then; enough, presumably, for the plans to be shelved until 2019, the new start date.
On one hand, it’s frustrating, because we’ve been told repeatedly that this or that is the final semblance of MTD. However, there are more benefits than drawbacks. Expanded test time equates to an efficient, bug-proof network that HMRC will have thorough experience with by the time it’s rolled out.
It also means you can steadily prepare for digital submissions, wrapping your head around how they’ll impact business methodology. So, let’s examine what the proposed changes are...
What you need to know
Along with the delay, our government has made these announcements regarding MTD, which bear paying attention to. They are:
- Partial adoption in the first year of activity. Business owners who earn over £85,000 will have to log their VAT records for those initial 12 months, but nothing more.
- The rest of MTD comes into force from April 2020. After that, the same £85,000+ businesses will have to be up to speed on their digital Self Assessments, with regular quarterly updates.
- Any company, freelancer or contractor earning less than £85,000 a year, and more than £10,000 per annum, can choose when to switch to MTD.
- Early versions are being tested later this year. By April 2018, there’ll be a live beta programme that’s open for voluntary registration, giving you the chance to test for yourself. HMRC will continue to listen and learn from user feedback.
Overall, we’re in favour of the extra time these stipulations give us. The end result will be the same – it’ll just take a longer, more cautious journey to get there. After 2020, we can realistically expect MTD to be entrenched in the way we do things, whatever the hang-ups have been so far.
To stay aware of the moving demands of this tax system, it’s worth hiring Nabarro Poole for all of your modern accounting needs. We’re prepared for Making Tax Digital, and will ensure that your business has the tools and processes to follow suit. Want to know more? Give us a call on 0161 998 4276 to speak to a member of our team.
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