HMRC publishes consultations on making tax digital
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.
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.
- changing how the self-employed accounting periods map onto the tax year
- extending cash basis accounting to larger businesses; reducing reporting requirements for businesses
- removing the need to distinguish between capital and revenue for businesses using cash basis accounting
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.
- looks at options for taxpayers covered by the requirement for digital record keeping to make and manage their voluntary payments
- considers how voluntary payments will be allocated across a taxpayer's different taxes
- explores the best way of dealing with the repayment of voluntary payments.
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.
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.
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.
Article written by Donna McCreadie