​Making Tax Digital

Due to the recent general election, Making Tax Digital was dropped from the Finance Bill but will be reviewed again by the government in due time.   This page will be updated when any further information has been published.  Please note that the dates mentioned below are likely now to be extended, but this has not yet been confirmed.

"By 2020, most businesses, self-employed people and landlords will be required to keep track of their tax affairs digitally and update HMRC at least quarterly via their digital tax account."
HMRC - Making Tax Digital

Let Sundial Accounting help your company through this transition.​

​Who does it affect?
By 2020 MTD will affect every business, landlord and self employed person, with only a few exceptions:

• A business, self employed person or landlord with turnover under £10,000.
• Charities.
• Community Amateur Sports Clubs.
• Businesses “unable to engage digitally”. This will cover the existing exemption from filing VAT returns online, as follows: ‘a person who is a practising member of a religious society or order whose beliefs are incompatible with the use of electronic communications; and persons for whom MTD is not reasonably practicable for reasons of disability, age, remoteness of location, or any other reason.’

​When do you need to be compliant?

• April 2018 if you are self employed or a landlord and your turnover is in excess of the VAT threshold, £83,000.
• April 2019 if you are self employed or a landlord and your turnover is below the VAT threshold, £83,000.
• April 2019 for all businesses that are registered for VAT.
• April 2020 for all businesses that pay Corporation Tax.

What does it mean?

• You will be required to report income and expenditure figures to HMRC digitally, via digital software or an app, on a quarterly basis.
• You will also need to carry on filing a year end return.
• There will be no penalty for inaccuracy.
• There will not be a compulsory requirement for accounting adjustments to be made quarterly.
• Digital copies of receipts will not be compulsory.
• You will still have 10 months, after the accounting period, in which to finalise your accounts with your accountant. 

​What are the benefits?
Believe it or not there are benefits to embracing quarterly reporting and the digital software that is available:

• More up to date business numbers will help you to see how your business is doing more regularly. This can help with making decisions about your business.
• Your records will probably be more accurate as there will be far less time in which to lose receipts etc!
• Using software makes it much easier to compare to last years numbers and see how your business is growing.
• You no longer need to panic in January looking for all your accounting records to hand over to your accountant and finding you have lost half of them!
• Your accountant can finalise your accounts and calculate your tax bill quicker, helping you to manage your cashflow better. 
• You will also have one digital tax account in which to see and manage your tax affairs, hopefully making your tax much more understandable!
• Using cloud based systems means your accountant can access your data easily and in real time to help you with any issues.

What should you do next?

• DO NOT PANIC!
• Work out when you will need be compliant.
• Talk to your accountant, they can help you through this process.
• Think about how you are going to meet the requirements, are you going to use spreadsheets and use software to convert and upload to HMRC.  Are you going to move to a digital accounting software package or app. Discuss this with your accountant as they may have preferences to what their clients use.
• Consider if you would like help in setting up your business on digital software or if you are confident enough to do the work yourself.  If you need help you could possibly use your existing accountant or a company like Sundial Accounting to get you set up and trained on the software. 
• Consider if you will manage your record entry ongoing yourself or you will need your accountant/bookkeeper to help with this.
• Put an action plan in place with timelines.
• Consider your training needs and those of your employees.

We are here to help.  We can explain the requirements and help you to design and implement an action plan to ensure you will be compliant in the time frame that is relevant to your business type and size.