Making Tax Digital - the consultation documents are out!
It has been long anticipated, but HMRC have finally released the 6 consultation documents relating to Tax Digitalisation that were expected the week of the referendum. These are some of the biggest changes to the way tax operates since PAYE was brought in during the second world war!
The documents cover:
- Bringing business tax into the digital age
- Simplifying tax for unincorporated businesses
- Simplified cash basis for unincorporated property businesses
- Voluntary pay as you go
- Tax administration
- Transforming the tax system through better use of information
The documents confirm that businesses will need to keep their records digitally and that quarterly updates of summary information will be mandatory, although the level of detail of these quarterly updates is one of the areas subject to consultation. The time limits look a bit more reasonable but will still be tight – with some businesses and landlords starting in 2018 and most of the others by 2020.
While it was expected that quarterly payments of tax would naturally follow on from quarterly reporting, this has not been suggested in the consultation documents but rather a voluntary pay as you go system has been proposed.
Generally, businesses and landlords with a turnover of less than £10,000 will not be obliged to produce quarterly reports or keep their records digitally and further exemptions are being considered for a limited group of businesses and landlords with annual incomes above that threshold, although the appropriate threshold is still under consultation.
MHA MacIntyre Hudson is conducting a detailed review of the consultation documents and is considering the impact Making Tax Digital will have on clients and how we can assist and advise clients through the transition.
The consultation period runs until 7 November 2016 so do talk to your engagement partner if there are specific points you would like us to raise as we are heavily involved in working with our institutes and directly to try to get HMRC to put a workable framework together for this radical new system.
Click here to read the full consultation documents.
If you have any immediate Making Tax Digital questions please contact your local office or send an enquiry as we are interested in discussing this with you.