HM Revenue & Customs have released six consultancy documents in August 2016 on the subject of Making Tax Digital (MTD).
From April 2018 the tax system will become increasingly digital with initially the self-employed, partnerships and landlords effected. These businesses will need to have software or apps to keep their business records, unless of course you utilise a firm of accountants to keep all these records for you.
Under MTD the tax payer will be required to upload summary data to their digital tax account with HM Revenue & Customs on a quarterly basis. The upload needs to be completed by the end of the month following the quarter, e.g. quarter to 30 June 2018 by 31 July 2018.
Therefore, there is no point in leaving this until April 2018, but work should be commenced perhaps from April 2017 in putting your business records onto appropriate software.
There will be some exemptions, tax payers with a turnover under £10K would be exempt initially as indeed will be Charities.
There is also talk of a further level of exemption for a year possibly turnover to £20,000 per annum.
As from April 2019 VAT will come under the same umbrella with VAT figures extracted from the same digital filing and no need to file VAT Returns directly.
The use of appropriate accounting software will facilitate all this and obviously more than ever there is a case to move to an appropriate software package preferably a Cloud version, allowing your accountants access and able to deal with your accounting and tax requirements.
Whatever happens the matter cannot be left to an end of year brown parcel package or even Excel spreadsheet or Guildhall cash book. I am afraid we all have to move forward into this digital age.
The digital tax account will show an update of the tax payers overall tax position. The information from employment (PAYE) banker interest will be directly fed into the account by HM Revenue & Customs via payroll records and Bank records.
This new system will also apply to Limited Companies and expected to be from April 2020.