HM Revenue and Customs (HMRC) has launched the first business pilot for Making Tax Digital as it seeks to test its new digital tax reporting system.
The pilot is just 12 months before businesses with turnovers beyond the VAT threshold must submit quarterly updates on their tax situation.
HMRC confirmed it will be inviting “some” businesses and their agents to sign up for a pilot to discover the process of reporting income and business expenses online.
Throughout the pilot, business owners will be required to use accounting software to detail their business income and expenses, as well as file summary reports of their income and expenses from their digital bookkeeping records quarterly – or more frequently if they wish.
HMRC will then provide participating businesses with an estimated calculation of the tax they owe based on their accurate summary reports.
The tax authority’s proposed pilots for Making Tax Digital have faced severe criticism for months. A Treasury Select Committee report published in the New Year urged for tests to be “substantive and wide-ranging”, fearing that HMRC’s approach was not inclusive enough to garner opinion from a broad spectrum of the UK business community.
However, an HMRC spokesman responded to the report by insisting “hundreds of thousands” of businesses would be involved in their Making Tax Digital pilots before being officially rolled out.
Last month, a new blog post was published from an HMRC online agent stating: “From April, we’ll start our live pilot of the changes with businesses and agents. We’ll start with small numbers but aim to have hundreds of thousands of small businesses and their agents taking part.
“We’d really appreciate your help in recruiting any of your clients who may be interested and fit the profile of the sort of business we are looking to help us initially. We’ll be saying more about this in the spring.”
The deadline for Making Tax Digital implementation has been extended for businesses, as well as self-employed professionals and property landlords, with annual turnovers totalling less than the VAT registration threshold. Quarterly digital tax updates will not be necessary until April 2019.
Your local TaxAssist Accountant can work with you to prepare for when Making Tax Digital is currently due to be introduced from April 2018 for those businesses operating with turnovers above the VAT threshold.
HMRC will not be offering software to help you report quarterly, so we have already partnered with Intuit QuickBooks to help make managing your accounting records easy, wherever you are.
If you would like us to help you through these changes then call us today on 0800 0523 555 or use our online enquiry form.