Making Tax Digital
On 13 July 2017, HM Treasury and HM Revenue & Customs published its second Finance Bill of 2017, which includes changes to the proposed Making Tax Digital initiative.
The changes announced on 13 July
The Government said it believes that introducing a new digital tax system is still the right direction to move in. However, it has made amendments to the businesses this impacts and the timescales for change. The amendments to Making Tax Digital now mean:
- Only VAT registered businesses will need to keep digital records and only for VAT purposes.
- They will only need to do so from April 2019.
- Businesses will not be asked to keep digital records or update HMRC quarterly for other taxes until at least April 2020
(the original dates had implementation from April 2019)
Businesses that are VAT registered:
- Will need to move to digital record keeping (i.e. use software to record all their VAT invoices and receipts).
- That do not yet use software to record their VAT information (invoiced from customers and suppliers) need to start planning for MTD. The new implementation date is April 2019
Businesses that are not VAT registered:
- Digital record keeping is optional, however these business owners can gain updated income tax estimates wheever they want, which will help with cash flow and forecasting.
Summary and Next Steps for Sage Users
In Summary, the legislative changes related to Making Tax Digital mean that customers will no longer be able to submit their returns manually. Subsequently from April 2019, companies must be using software that is connected to the HMRC’s API for submissions.
With regard to both Sage 50 and Sage 200, Sage have completed the work to support the HMRC private beta program (April 2018). This will be included in all new Sage 50 and Sage 200 releases from now. The HMRC beta goes public in July 2018. Thus assuming HMRC do not change anything as a result of their own beta testing, Sage will have a MTD ready version of both Sage 50 and Sage 200 from the very next release.
Sage are currently in discussion with their Key business partners, of course including Smith Cooper, as to how the new functionality will be rolled out to existing users of Sage 200 and we will provide clear instruction and direction in this regard as soon as we are able.
If you have any questions on how MTD may affect your business, do not hesitate to contact us on 01332 587515 or firstname.lastname@example.org