April 2018 has been set as the first anticipated go-live date for quarterly reporting of income tax and national insurance contributions by businesses and traders who pay income tax on their profits. This definition will take in some
of the smallest, least digitally aware taxpayers as well as large and quite complex partnerships such as Solicitors practices.
To meet that April 2018 deadline, public testing of HMRC’s systems with submissions from third party software should start in April 2017. The MTD launch sequence is being organised by type of tax, so if the programme proceeds as planned, quarterly VAT data will be added to
the digital reporting mix in April 2019 and corporation tax data submissions will come on stream in 2020.
The amusingly named, Administrative Burdens Advisory Group who have said 'digital record keeping ....... is not an approach we can endorse' are lobbying for the re-introduction of quill pens and leather bound ledgers presumably for fear that businesses will start to use those new
fangled computers. Whatever next? (I made that last bit up!)
It is worth remembering the objectives set out for MTD:
"The government is committed to reducing burdens for taxpayers and building a transparent and accessible tax system fit for the digital age… HMRC will collect and process
information affecting tax in as close to real time as possible, stopping tax due or repayments owed from building up. Individual and business taxpayers will no longer have to wait until the end of each tax year before knowing how much tax they should pay, avoiding any surprises and helping them to plan their financial affairs with more certainty. And taxpayers will be presented with a complete financial picture of their tax affairs in their digital account, able to see and manage all of their
liabilities and entitlements together for the first time.”
Change is never easy - or necessarily welcome - but these are worthwhile objectives for a modern digitally connected economy and as I have repeatedly said anything that will encourage entrepreneurial small businesses to get on top of their numbers is to be welcomed.
The consultation process ends on 7th November 2016 after which we shall know a lot more. If you would like to discuss how MTD will affect your business please book a call with me at www.calendly.com/noelguilford.
Noel Guilford
Noel Guilford is the principal of Guilford Accounting a
small business accountancy practice specialising in advising owner-managed businesses on current accounting, finance, and tax matters. You can reach him via email at noel@guilfordaccounting.co.uk or by phone at 01244 660866. He is the author of the best selling book 'Figure it out - an entrepreneurs guide to understanding your business numbers'
which you can obtain by visiting http://guilfordaccounting.co.uk.