HM Revenue and Customs (HMRC) has recently published a response at the end of a consultation period following six consultation documents being issued last summer.What do the main provisions mean for affected taxpayers?
What will this mean for us and our relationship with you if you are affected?
- from April 2018 it will be mandatory to maintain your records using online accounting software
- you will be required to use this software to report transaction data to HMRC quarterly
- you will be required to use this software to file an annual tax declaration
- you will be given the opportunity to voluntarily pay tax, based on business activity during the year
- a shift change to the rhythms and methods of tax reporting
- we can access your digital tax account as your agent, and carry out all filing activity on your behalf, assisting with ensuring filing deadlines are met
- we may need to revisit our fee structure and how and when we interact with you
The taxpayers affected will be those who are self-employed or with rental income, where income is above a certain threshold. In the Spring Budget 2017, the Chancellor announced the threshold would be aligned with the VAT threshold, which will be £83,000 from April 2017, for the first year. In subsequent years the threshold will be set at £10,000 pa.
Many taxpayers are not affected by these provisions - those with business or rental income below the threshold, or because their income is from earnings, interest or shares for example.
For all taxpayers, whether affected or not as outlined above, there is an impact as follows:
- the ability to access and update your digital tax account in real time
- all your tax information and interaction with HMRC dealt with in one place, via your digital tax account.
- less rekeying of data – HMRC will pre-populate digital tax accounts with information they already hold from PAYE/ pension records, P11D forms, interest details from financial institutions
Eventually, it will mean the end of the self-assessment tax return.
We will be publishing further updates as more information becomes available. Meanwhile, we are staying in touch with developments, as are our software providers, so that we are fully in control of meeting the needs of our clients. We are ensuring we have the resources and skills necessary to fulfill all Making Tax Digital obligations of our clients, including handling quarterly reporting.