Many business owners, professional advisor's and the Treasury select committee had expressed concerns about the timescale for the introduction of MTD. The Chancellor therefore announced that there will be a one year deferral in the start date to 2019 for self-employed businesses and property landlords with gross income below the VAT registration limit. Another way of delaying the start of Making Tax Digital (MTD) would be to change the year end of your business. The proposed legislation currently specifies that MTD will apply to accounting periods commencing on or after 6 April 2018. This means that if you currently prepare accounts to 30 April then the first quarterly update to be submitted to HMRC will be for the period to 31 July 2018. However, if you changed the accounting date of your business to 31 March then the first quarterly update would be for the period from 1 April to 30 June 2019.
There will be no late filing penalties in the first year of the new system and the deadline for finalising taxable profit for a period will be the earlier of:
• 10 months after the last day of the period of account, or
• 31 January following the year of assessment in which the profits for that period of account are chargeable
Businesses and property landlords with a turnover up to £150,000 will be able to prepare accounts on a cash basis Digital quarterly reporting for companies and larger partnerships will not be introduced until April 2020. These changes will have a significant impact on how you keep your business accounts and communicate with HMRC and in most cases it is highly recommended that people take on a suitable accounting software package, such as Xero, to get over the hurdle.
Please contact us to discuss the impact of these changes on the way that you keep your accounts and the best possible solution's to help.