Making Tax Digital (MTD) for Businesses and Individuals

Making Tax Digital MTD

Making Tax Digital (MTD) is a government initiative that promises to introduce ‘a transformed tax system and the end of the tax return’ by 2020. The government wants to make tax administration more effective, more efficient and easier for taxpayers, through the implementation of a fully digital tax system. Preparation is well underway with over 8 million people already using their Personal Tax Accounts.     

The proposals will apply to a wide range of taxpayers including businesses, the self-employed, landlords and individual taxpayers.

Initial policy papers were published by HMRC in August 2016 and a consultation period allowed industry experts to respond with their concerns and suggestions, something which Lambert Chapman LLP have been actively involved in. This consultation period ended in November 2016, and HMRC have just published their response to the consultation (see useful links below).

The main benefits of the new system:

  • Taxpayers will have access to online Digital Tax Accounts (DTA), with the information HMRC needs automatically uploaded, enabling the taxpayer to interact with HMRC digitally.
  • No more manual records and form-filling - taxpayers should never have to tell HMRC information it already knows.
  • Unnecessary time delays are eliminated - the tax system operates much more closely to ‘real time’, keeping everyone up to date and removing the risk of missed deadlines, unnecessary penalties, debts arising and errors in the system being carried forward from one year to the next.
  • By 2020, businesses and individual taxpayers will be able to register, file, pay and update their information at any time of the day or night, and at any point in the year, to suit them.

These are ambitious plans and a huge shift in what we have been used to, and even though some of our clients are already utilising online systems and reporting, we anticipate that the changes will affect a lot of our clients while the new systems settle-in.

What Next?

Following the HMRC announcement, Making Tax Digital (MTD) reporting is to go ahead as planned from April 2018 with quarterly reporting for sole traders and landlords. In addition:

  • businesses will be permitted to use spreadsheets to record their receipts and expenditure and submit them online
  • free software will be available for smallest firms
  • self-employed, businesses and landlords with a turnover of under £10,000 per year will not need to make quarterly updates online
  • accounting income and expenditure on a ‘cash in, cash out basis’ will be extended
  • quarterly updates will not apply to charities
  • businesses will have 12 months to adjust to the changes before any late submission penalties take place
  • digital systems will be tested with real-life businesses before the official roll out to give businesses time to prepare.

Lambert Chapman Accountant AppWe are in regular dialogue with HMRC in respect of the changes and will keep you up to date with developments. We are working to provide you with the very best software solutions the market can offer so that we can make the transition as smooth as possible.

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Making Tax Digital MTD Latest News

Making Tax Digital MTD Training and Events

Making Tax Digital Breakfast Briefing - Preparing our clients for the Digital Tax Revolution Event Roundup (PDF)

24 May 2017                              Lunchtime Learning: Making Tax Digital & Bookkeeping Braintree Town Hall (Council Chamber) CLOSED

7 June 2017                               Lunchtime Learning: Making Tax Digital & Bookkeeping OAKhouse Bar Cafe (Maldon) CLOSED

28 June 2017                             Lunchtime Learning: Making Tax Digital & Bookkeeping Braintree Town Hall (Bartram Room) CLOSED

12 July 2017                              Lunchtime Learning: Making Tax Digital & Bookkeeping OAKhouse Bar Cafe (Maldon) (LAST FEW PLACES)

6 September 2017                    Lunchtime Learning: Making Tax Digital & Bookkeeping Weston Homes Community Stadium (Colchester)

27 September 2017                  Lunchtime Learning: Making Tax Digital & Bookkeeping OAKhouse Bar Cafe (Maldon)

4 October 2017                         Lunchtime Learning: Making Tax Digital & Bookkeeping Braintree Town Hall (Council Chamber)

Making Tax Digital MTD Useful Links