In response to the August 2016 6 consultation documents by HMRC on “Making Tax Digital for Business (MTDfB)”, HMRC has provided further clarification on the timescales for the implementation of MTDfB. This will affect accountants and their micro-business clients.

There will be a pilot scheme commencing in April 2017, with the inclusion of entities such as sole traders and landlords, who are not registered for Value Added Tax (VAT), planned for April 2018. April 2019 will see taxpayers who are registered for and are paying VAT, and from April 2020 will include businesses who are registered to pay Corporation Tax.

The stance taken by HMRC towards those businesses, which continue to use spreadsheets for their digital bookkeeping once MTDfB is under way, are as follows:

  • The business’ record-keeping must include a digital functionality
  • They must be able to provide quarterly information updates
  • The record-keeping must support year-end

Whilst HMRC will still accept spreadsheets under MTDfB, for record-keeping, the above points must be adhered to, in order for businesses to comply with the scheme. Consequently, spreadsheets will need to be used in conjunction with software if businesses are to comply with MTDfB. Further details regarding the practicalities of the initiative will be made clear once the pilot scheme is under way.

The year-end deadline for personal tax will continue to be the 31 January. However, it will be up to the client to choose when they intent to share their records with their accountants. Whether on an ongoing basis throughout the year, at year-end or as and when updates are required.

In an effort to support businesses through the process of MTDfB, HMRC will not be charging taxpayers late submission penalties under MTDfB for at least 12 months.

JJBS Bookkeeping Solutions uses HMRC compliant software and are ready to support you and your business in Making Tax Digital. Contact us for more information.