Making Tax Digital for Business (MTD)
Last minute. Every year. You make it through the festive season, get back to work, kids at school, New Year resolutions already forgotten. A pile of paperwork crammed into a box, shuffled off to the accountant just in time for the January deadline.
Then something worse happens. It’s not once a year any more. You’re going to have to report your finances every three months. Really?
Well, maybe. Maybe not. Small businesses with sales of up to £10,000 per year will be exempt. There have been calls for this threshold to be higher, and HMRC have said they’ll consider that. We’ll have to wait and see.
So what does ‘Making Tax Digital’ mean? Briefly, it’s a change from the annual tax return, to quarterly reporting with a final year-end check. So business owners will need to tell HMRC their sales and expenses each quarter. The requirement will be phased in from April 2018.
HMRC believe that everyone uses a computer, keeps everything perfectly up to date, consequently they think we will ‘just press a button’ to upload data. We know differently. Your focus is on running your business and making sales while engaging with customers. Any energy left goes into running your life. Quarterly reporting is going to happen, but it doesn’t need to be too painful.
Unfortunately we don’t yet know exactly what HMRC will be asking for. We don’t know what free software or apps will be available. If you already use bookkeeping software, it should be updated in time. If you use spreadsheets, or paper records, that’s fine. A lot of the information we have on MTD is vague, but yes, really, businesses will need to update records every three months.
We help with bookkeeping, finding software, quarterly reporting and the year-end check of your tax liability. Please get in touch if you’d like to discuss any of this.
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