Plans announced by HM Revenue & Customs (HMRC) for Making Tax Digital (MTD) continue to remain unclear, say Milsted Langdon Chartered Accountants – despite the fact that the change is imminently upon us.
Thus far, very little information has been made public about exactly what MTD will involve, says Simon Denton, resident Tax Specialist at Milsted Langdon.
“MTD will change the tax return as we know it, and is expected to replace the current system altogether by 2020,” says Simon Denton.
Despite HMRC’s limited information released on the topic so far, Milsted Langdon can reveal that HMRC’s plans will be broken down into two main strands: MTD for businesses and MTD for individuals.
“The proposed changes will have a significant impact on both business and self-assessment taxpayers, and I’m chasing HMRC to give our clients the lowdown on the potential effects of both.
“We understand that quarterly updates will be capable of being aligned for VAT registered businesses – following Government concerns that quarterly digital reporting will address poor record keeping in the SME sector.
“So far, it has been confirmed that HMRC’s initiative to bring tax up to speed with the digital age will see the traditional tax return effectively scrapped – most likely in favour of online banking-style accounts offering more regular payments and a digital tax breakdown for their users,” says Simon Denton.
Experts at Milsted Langdon suspect that HMRC will expect information on business and personal income and expenditure to be submitted ‘at least’ quarterly.
However, by far the most alarming change HMRC are attempting to enforce is to make digital tax reporting compulsory within the next few years – boldly stating that tax in Britain will be 100 per cent digital in less than 4 years’ time.
This change means that any businesses who currently use handwritten books to keep up with their accounts are in for a serious shake-up.
Simon Denton said: “The problem so far is that HMRC’s consultation on how the policy will be implemented is far more concerned with raising awareness of its existence than explaining what exactly will be required of taxpayers”.
Milsted Langdon has offices in Bath, Bristol, Taunton, Yeovil and London.