Making Tax Digital – are you ready for quarterly reporting?
Starting in April 2018 under the “Making Tax Digital” or “MTD” programme, the Government will implement its plan for all businesses with a turnover of over £10,000 to maintain digital financial records and to report financial information to HMRC every 3 months.
This is no laughing matter, especially for many small businesses who do not use accounting software, but instead just rely on a spreadsheet as their sole means of record keeping, or even worse, just hand a carrier bag full of paper receipts to their accountant once a year.
The new rules will affect all businesses and will be phased in from April 2018, with unincorporated businesses being the first batch to report financial information quarterly. Limited companies are expected to come on-stream for quarterly reporting in April 2020.
HMRC will not be issuing their own software for quarterly reporting of financial information. Instead businesses will be expected to use commercial accounting software suitable for making such online submission of financial information. Leading accounting software providers like Xero, Kashflow and Quickbooks will have their accounting software products ready for reporting requirements directly to HMRC. However, it is currently believed that Excel spreadsheets will not be permitted for recording and submitting digital data required by HMRC.
Under the new reporting regime quarterly tax payments will not be compulsory, but PAYG voluntary payments will be an option to businesses who may wish to smooth their tax payments to HMRC and to help with their cash flow.
Undoubtedly there are going to be additional costs and administration with this new reporting regime for all businesses – large and small. We believe the best approach is to plan ahead and be proactive in dealing with the new quarterly reporting requirements and ensuring that your financial records are digitally recorded. Most of our clients are already using appropriate accounting software. We recommend Quickbooks Online and Xero accounting software, and we can provide discounts to our clients with these cloud-based products.
If you believe we can assist you in ensuring that you are digitally prepared for the new reporting system please contact us on 07745 90 91 86 or 020 30 86 85 12.