Firms continuing with MTD planning

Almost half of businesses are pressing ahead with preparations for Making Tax Digital (MTD), according to research. 

Thomas Reuters polled 867 business owners and found 47% are continuing their planning for quarterly reporting, while 35% will revisit their strategy next year. 

Most businesses are no longer required to submit quarterly reports to HMRC until 2020 at the earliest, although they can choose to do so voluntarily.

70% of the businesses polled who had started the shift towards digital accounts said their plans have highlighted key areas of focus, such as training and using new tools.

Steps taken include:

  • assessing potential software (77%)
  • assessing clients (71%)
  • conducting internal staff meetings (62%)
  • reviewing service offering (56%)
  • assessing processes (55%).

Mark Purdue, tax product manager at Thomson Reuters, said:

“Many firms are choosing not to waste the time and effort they have already put into MTD and are continuing to make changes and seek out new technology to help them take on, and indeed benefit from, the digital tax challenge.”

Amended timeline

Based on the amended schedule for MTD, the digital system will only affect firms with an annual turnover above the VAT threshold – and for reporting VAT only – in April 2019. 

This means most small businesses, landlords and self-employed people will not need to report their records on a quarterly basis until at least 2020.

The table below shows for the amended MTD timeline (subject to further change):

Annual turnover Quarterly tax reports New timeline Previous timeline
Over £85,000 + VAT registerd VAT only 1 April 2019 1 April 2019
Over £85,000 Income tax and national insurance At least April 2020 6 April 2018
£10,000 to £85,000 Income tax and national insurance At least April 2020, and voluntarily 6 April 2019
All companies Corporation tax At least April 2020 1 April 2020

In addition:

  • spreadsheets can be used to record receipts and expenditure
  • quarterly updates do not apply to charities
  • accounting for income/expenditure on a ‘cash in, cash out basis’ will be extended.

Most business owners will have at least 2 years to adapt to the changes before they are legally required to submit digital records.

Contact us to discuss your preparation for MTD.