Chartered accountancy firm Simpkins Edwards is advising its farming and rural business clients to plan ahead in readiness for the roll-out of the Government’s ‘Making Tax Digital’ scheme. Although deferred in the 2017 Spring Budget, and put on hold as legislation until after the election, the firm believes that there are real benefits for rural businesses that take their tax affairs digital now.
Making Tax Digital is a scheme that was set out by the Government in the spring of 2015, under which HMRC will introduce measures to improve the ease and efficiency of the tax system by moving it online.
Under recent changes to the proposals on the Making Tax Digital scheme for Businesses (MTDfB), unincorporated businesses and landlords with turnovers below the VAT threshold (£85,000 from 01 April 2017) will be required to start using the new digital service from April 2019. Those with a turnover above £85,000 are expected to sign up from April 2018. Taxpayers will be given at least 12 months to familiarise themselves with the new quarterly reporting changes before any late submission penalties are applied.
For partnerships with turnover exceeding £10 million MTDfB will be deferred until 2020, while the cash basis entry threshold for unincorporated businesses has increased to £150,000 and the exit threshold to £300,000.
Mary Jane Campbell, Partner and head of Simpkins Edwards’ agricultural and rural business team said: “Designed to reduce form filling, improve real-time operations and improve access, MTDfB enables businesses to be nimbler and to stay on top of their accounts. It’s good practice, so despite the delay in its introduction, we would advise all rural businesses to look at the benefits of going digital now.
“Although the free-at-the-point-of-use software, which will be provided to businesses with the ‘most straightforward’ tax affairs, is an unknown entity businesses can use third party software, already available via accountancy practices, which means they can iron out any teething problems before the legislation comes in. Firms will also be permitted to use spreadsheets for their record-keeping. However, these must meet the relevant requirements of MTDfB.”.