Saffery Champness urges rural and farm sector to be ready for Making Tax Digital
In just over 12 months it is expected that the first phase of HMRC’s Making Tax Digital (MTD) project will come on stream and Scottish acountancy firm Saffery Champness is warning rural businesses to be ready.
Unlike previous major national initiatives, such as RTI reporting for PAYE and auto enrolment for pensions, it has been proposed that MTD will hit smaller businesses first, except those with turnovers below £10,000 per annum that will be exempt.
MTD will entail keeping records digitally with the prospect of submitting a quarterly summary to HMRC and a separate annual submission finalising annual tax figures within 9 months of year-end.
Subject to confirmation, it is understood that unincorporated businesses will be first into the new reporting regime with MTD for income tax for them set to kick in from 6 April 2018 although there has been discussion for deferral for the smallest businesses – those above the £10,000 exemption – for one year.
VAT reporting for unincorporated businesses and companies will fall within MTD from April 2019, and corporation tax from April 2020.
Coll Murchison-MacDonald, partner in the Inverness office of Saffery Champness, and a member of the firm’s Landed Estates and Rural Business Group, said: “This new regime may present a challenge for many rural businesses, and particularly those that do not currently keep their own accounting records using dedicated software.
“There is also a lot of detail missing at the present time and, despite the tight timeframe, we are still very much waiting for further announcements. Ongoing consultations have set out how MTD will work for straightforward unincorporated businesses including simple partnerships, but there are still a lot of holes in what we actually know and what we are facing.
“If we accept that MTD is coming next year then general advice to all businesses at this time should be to assess current record keeping and tax compliance processes and identify whether any new software, or the hardware to run it, is needed. When buying new software security over the financial data of the business should also be a consideration.
“It takes time to get acquainted with new systems and this whole exercise is all about improving efficiency. We anticipate that there will be penalties for those who cannot comply within the required timeframes and ignorance, as is ever the case, will be no excuse.”