If you can cast your mind back to March 2015 you may remember George Osborne announcing, in his budget speech, a new initiative ‘Making Tax Digital’ to get us all accounting for tax in real time?
We’ve had little to go on in the intervening months but there is now a published consultation document which provides more detail of how the Government envisage the system working and, as the name suggests, they want feedback from the owners of small businesses and their accountants.
Does Making Tax Digital Apply to You?
Eventually, the answer will be yes, but for now at least this published document only covers sole traders and partnerships, there’s no mention of Limited Companies – we expect those plus their Directors to be dealt with later.
It looks likely that there’ll be a threshold too, so if your annual turnover or income is less than £10,000 it appears that you won’t be included into Making Tax Digital but you will have to be careful if you have income from multiple sources, which take you over the £10,000 threshold.
The detail isn’t yet clear, but it seems that businesses with an annual turnover/income within a low income bracket that’s yet to be announced, may not have Making Tax Digital applied to them for an extra year.
It does seem that HMRC are taking a fairly hard line about using the online service. There will be some sectors that have wriggle room, but just about everyone will be expected to submit data online.
Let’s hope the online service they eventually build will be robust enough to deal with the volume of traffic!
This is your chance to have your say. HMRC really do want your inputs. Go the HMRC site and read more about the proposals as they currently stand and give them some feedback. They appear to be listening.