This is to remind our business clients that VAT is the one area where HMRC have given a firm deadline for the start of digital reporting. Businesses over the VAT threshold (currently £85,000) will need to report digitally and provide their VAT return information to HMRC through Making Tax Digital (MTD) compatible software, for VAT periods starting on or after 1st April 2019. VAT registered businesses with turnovers below the VAT threshold can opt to report digitally, but will not be compelled to do so until 2020 at the earliest.
At present HMRC have no plans to release their own software, rather they are relying on third party software developers to build compatible software. The IT development team here at websters are looking into and testing all the software options including developing our own online software WebsterAccounts to become MTD compliant. Watch this space for an update in our September newsletter.
Regarding other taxes, quarterly income tax reporting for unincorporated businesses is still possible with effect from April 2020. We would advise all our unincorporated businesses to ensure they are working towards a successful transition to digital income tax reporting.
What is equally clear is that HMRC have called a halt to further development on its MTD for individuals. We are unlikely to see further progress on digitalisation of non-business income, including pulling details of bank and building society interest through to individuals’ Personal Tax Accounts, for some time.
Also, little detail has been released as to what MTD might look like for companies, although the Government has committed not to extend digital reporting for corporation tax until April 2020. Although there is no formal indication of what digital CT reporting might look like in practice, it is thought that quarterly reporting is the most likely. A consultation document with more information is expected to be published over the summer, and we will of course keep our clients updated.