HMRC publishes consultations on making tax digital

Last updated on 22 Aug 2016

Making Tax Digital (MTD) is the name HM Revenue & Customs (HMRC) has given to its plan to transform tax collection and to replace the annual tax return. HMRC’s proposals include keeping tax records digitally and quarterly reporting, via online tax accounts created for individuals and business taxpayers.

Businesses and landlords with an annual turnover of less than £10,000 will not be obliged to produce quarterly reports or to keep their record digitally. However, most unincorporated businesses will be expected to move into the digital regime from April 2018, with limited companies to follow in 2020.

HMRC have published six consultation documents, each focusing on specific customer groups or specific elements of the MTD reforms, with final plans for quarterly reporting for incorporated businesses set to be consulted on in the autumn.

An overview for small businesses, the self-employed and smaller landlords

This document provides an easier way to respond to the MTD consultations and is specifically aimed at small businesses and landlords.

Bringing business tax into the digital age

This consultation considers how digital record keeping and regular updates should operate. It will be of interest to: all businesses, the self-employed and landlords, as well as agents, business representative bodies, software developers and insolvency practitioners.

Simplifying tax for unincorporated businesses

This consultation seeks views on:

It will be of interest to: self-employed individuals and partnerships, as well as their agents and representative bodies.

Simplified cash basis for unincorporated property businesses

This consultation considers the extension of cash basis accounting to landlords. It will be of interest to individuals and partnerships of individuals with unincorporated property businesses (landlords), as well as their agents and representative bodies.

Voluntary pay as you go

This consultation:

It also announces the opportunity regular updating provides to make earlier repayments. It will be of interest to: all businesses, the self-employed and landlords, as well as agents, business representative bodies, software developers and insolvency practitioners.

Tax administration

This consultation covers aspects of the tax administration framework that need to change to support Making Tax Digital. It also sets out proposals to align aspects of the tax administration framework across taxes, including the simplification of late filing and late payment sanctions.

It will be of interest to: all individual and business taxpayers, agents and representative bodies with an interest in the tax administration framework.

Transforming the tax system through the better use of information

This consultation focuses on how HMRC will make better use of the information currently received from third parties, to provide a more transparent service for taxpayers that reduces end of year under and over payments.

It will be of interest to: all individual and business taxpayers, agents who currently complete tax returns for their clients, software developers, employers and all other organisations that provide customer information to HMRC.

HMRC are also running a program of webinars and face to face events across the UK, to provide more detail on the consultations, as well as an opportunity to ask questions or give feedback on the proposals.

The consultation period will run until 7 November 2016 and more information, as well as links to the various consultations, can be found via the following:

https://www.gov.uk/government/collections/making-tax-digital-consultations

Article written by Donna McCreadie

Perrys Chartered Accountants