HMRC release response to Making Tax Digital feedback
HMRC’s long-awaited response to their Making Tax Digital consultation has finally been revealed, and there are both positives and negatives to be taken away.
Bar a small number of exceptions, all businesses will be required to hold their accounting records digitally and submit quarterly updates to HMRC, followed by an end-of-year reconciliation to ensure that the entire year’s activities are recorded for tax.
It should be noted that the government are continuing to consider issues such as the exemption threshold, so what features in the full report is not a finalised list of changes.
Key decisions for Making Tax Digital for Business:
- Businesses will be able to continue to use spreadsheets for record-keeping, but they must ensure that their spreadsheet meets the necessary requirements of Making Tax Digital for Business – this is likely to involve combining the spreadsheet with software
- Businesses eligible to use ‘three line accounts’ will be able to submit a quarterly update with only three lines of data (income, expenses and profit)
- Free software will be available to businesses with the most straightforward affairs
- The requirement to keep digital records does not mean that businesses have to make and store invoices and receipts digitally
- Activity at the end of the year must be concluded and sent either by 10 months after the last day of the period of account or 31 January, whichever is sooner
- Charities (but not their trading subsidiaries) will not need to keep digital records
- For partnerships with a turnover above £10 million, Making Tax Digital for Business is deferred until 2020
You can read the full, 81-page report on MTDfB here.
Responses to the other consulations can also be accessed here.
Do you think HMRC are doing enough? Let us know via MTD@iris.co.uk.
We’ll be providing an in-depth analysis of the updates to the MTD proposals in the coming days via our Making Tax Digital Hub, where soon we’ll also be announcing our all-new MTD roadshows, coming to a city near you this spring.