2020 – MTD remade
Every good movie has a sequel and if MTD was a movie the original film is due out in April 2019 (see previous blog). The build-up has already begun; there are a wealth of webinars and resources to engage with so that every business, bookkeeper, accountant and tax agent can be fully ready for the release next April.
However, there are other components to MTD such as income and corporation tax that have been placed on hold until April 2020 at the earliest. So just like every sequel, what can we expect and will it carry on in the genre as the original release? The issue with MTD is that it has already made been delayed and has changed its Director a number of times.
Under the reformed timetable those businesses with a turnover above the VAT threshold (£85, 000) will have to keep digital records, but only for VAT purposes, staring from 2019. Businesses will not be asked to switch to MTD and update HMRC quarterly for other taxes till at least 2020. We await further details to be announced for this but what can we glean from the current spoilers?
Firstly, MTD for income tax will apply to the self-employed, partnerships and those who receive income from property. However, most of this legislation is still only in draft form; in film terms, it’s still with the writers! If MTD for income tax does become mandatory, businesses in scope will be required to maintain accounting records digitally and submit quarterly information to HMRC and finalise their tax position at the end of the year.
So this will mean that businesses, or individuals, in scope, will have to either acquire suitable commercial software or appoint an agent to submit information to HMRC on their behalf. HMRC’s paper or online self-assessment portal will only be available to those outside the scope of MTD for income tax. There will be an exemption for those with a turnover below a threshold although this is yet to be decided. (£10, 000) was the suggested level from the consultation process.
Whether this film is a horror story is still to be seen; for some it may be but for others who are prepared it may be an enjoyable drama with a few twists and turns. With the budget soon upon us and Brexit still the ongoing serial drama I’m sure that there will several plot twists ahead of us! Watch this space!!