Among the welcome announcements in the Spring Budget was the delay in requiring sole traders, partnerships and landlords to report income and expenses quarterly to HMRC under the Making Tax Digital initiative.
The delay of one year from April 2018 to 2019 affects a large number of small businesses and landlords with annual turnover below the VAT threshold.
The revised implementation for Making Tax Digital now looks like this:
April 2018 - Income Tax and National Insurance for sole traders, partnerships and landlords where turnover exceeds the VAT threshold (£85,000)
April 2019 - Income Tax and National Insurance for sole traders, partnerships and landlords with turnover below the VAT threshold, but above £10,000.
April 2019 - for VAT
April 2020 for Corporation Tax
The digital reporting requirements also apply to employed people with a secondary income over £10,000 p.a. from self-employment or property.
There is to be further consultation on proposals for late submission penalties and charging of penalty interest on late payments. Hopefully the outcomes of the consultation will reflect the government’s stated intention that Making Tax Digital should help businesses of all sizes to manage their tax affairs more efficiently, with fewer mistakes and a more accurate understanding of their tax position.
Naturally, any business that has detailed and regularly published management accounts will find the requirements of digital reporting fairly straightforward. So now might be a good time to look at whether the your regular finance reports really give you the full picture about the health of your business and your tax position.
More details on Making Tax Digital can be found on the gov.uk website.