What’s next for Making Tax Digital? Michael LansdellFeatured Products Promotional Features
Posted by: Dental Design 14th June 2019
I last covered Making Tax Digital (MTD) at the end of 2016. If you need a recap, this is a bold initiative, first published by HMRC the year before. It outlined an exciting vision for a tax system that was “fit for the digital age”, by being easier, faster and more efficient. The goal of MTD was (and is) to make it “easier for taxpayers to get their tax right”.
In 2016, I did note how dental practice owners would probably raise a cynical eyebrow at the words ‘easier’, ‘efficient’ and ‘tax’ being in such close proximity. At the time, there were still many details that had yet to be ironed out and consultations that had not taken place. Despite this, HMRC was still planning to be fully digital by 2020, and talked of a bright future where taxpayers would be able to file, pay and update information pertaining to their digital tax account whenever it suited them. No more annual tax return and a simpler system? What’s not to love?
So, where are we now? Well, most of you know that the pace of change has slowed down somewhat and that anyone who was expecting a speedy revolution should probably not have held their breath.
In 2017, a new timetable for MTD was announced, in response to legitimate concerns that many small business owners, as well as the Treasury Select Committee, had about the speed and scope of the proposed changes.
The slow-down was confirmed in the Spring Statement delivered by the Chancellor in March. The government said it pledged to support businesses with their transition to MTD and therefore would not be making it mandatory for new businesses, or taxes until 2020. Briefly, businesses are not obliged to use MTD software for any taxes other than VAT until April 2020 at the earliest.
With regards to MTD for VAT, there are rules around timing:
- A business will only need to keep digital records and use the MTD software if it has a taxable turnover above the VAT threshold of £85,000 and is not in the deferral group (see below). A business that fits the criteria is now required to use MTD for VAT periods that started on/after 1 April 2019.
- For other VAT-registered businesses in a deferral group, mandation to MTD is now delayed until October 2019. The decision to have a deferral group came about following concerns that the system should be adequately tested by the time the new, later date swings around. What factors might put a business in the deferral group? Having more complex VAT requirements such as being a public corporation and if it uses the annual accounting scheme. Anyone in this group will now be obliged to use the MTD software and keep digital VAT records from its first VAT return period, starting on/after 1 October 2019.
Back in 2016, I outlined all the great benefits being promised by the roll out of MTD. The main one was that it could remove unnecessary delays and prevent a mistake from remaining on the system for longer than necessary and the consequential build up of hefty repayments due to missed deadlines.
My advice then was wait and see how things panned out and to keep tax affairs in impeccable order to ensure that your practice’s transition to the digital era is as smooth as possible – this still stands! Your accountant – and make sure you enlist the services of one that has knowledge and experience of working with and for dental practice owners, such as the specialist team at Lansdell & Rose – will help you stay prepared with wherever the MTD journey goes to next, however long it takes to get there.
For more information please visit www.lansdellrose.co.uk
or call Lansdell & Rose on 020 7376 9333.
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