NEWS
September 11, 2017
The government recently announced that the start date for the digitalisation of the UK tax system will be introduced more gradually than originally planned. They have been planning a change to the UK tax system for some time now, and although there will be no change in the underlying substantive law governing the amount of tax due, Making Tax Digital (“MTD”) will fundamentally change the UK tax system.
Under the government’s new timetable:
- only businesses with a turnover above the VAT threshold (currently £85,000) will have to keep digital records and only for VAT purposes
- they will only need to do so from April 2019
- businesses will not be asked to keep digital records, or to update HMRC quarterly, for other taxes until at least 2020
Businesses with turnover below the VAT threshold will not be required to use the system, but can choose to do so if they wish. Businesses will also be able to opt in for other taxes.
The government has given assurances that it will not widen the scope of MTD beyond VAT before the system has been shown to work well, and not before April 2020 at the earliest. This will ensure that there is time to test the system fully and for digital record-keeping to become more widespread.
Although it has been postponed, it is still advisable to make plans now, and for many businesses a Cloud based accounting software is the way forward. When it comes to migrating over to a Cloud based system, it can take time to get used to the software, train up on how to use it and spend time making sure the system does what it needs to. MTD is on its way, whether we like it or not, and HMRC’s expectation is that all businesses will be required to utilise appropriate software by the time MTD becomes mandatory.
The right Cloud accounting system should prove an invaluable tool for business owners. Operating entirely within the Cloud enables clients and accountants to work from the same data set in a live setting. The advantages are clear to see such as real-time access to your financial data, snap shots of your business performance from any internet-connected device, and no need for separate backups.
If you would like advise on migrating over to a Cloud based system, please contact your Barnes Roffe partner.
Blog written by: Philip Jahn
PLEASE NOTE: By the very nature of this type of information the details of tax law might have changed since they were published, so contact your Barnes Roffe partner before acting on any matter contained in this document.
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PLEASE NOTE: By the very nature of this type of information the details of tax law might have changed since they were published, so contact your Barnes Roffe partner before acting on any matter contained in these documents.
