‘I’m confused about Making Tax Digital. What is it and does it apply to me?’
I don’t blame you for being confused! Until recently every business with sales over £10k per year was due to start submitting information online every quarter to HMRC starting April 2018. Now, I am a HUGE fan of digital accounting as it enables business owners to have timely numbers to use for their key business decisions. However, I was concerned that neither HMRC nor a lot of small business owners would be ready in time and that it would be an unnecessary burden both financially and time wise on the smallest of businesses.
The fantastic news is that HMRC has announced on 13 July that Making Tax Digital (MTD)
- Only be compulsory for businesses with turnover above the VAT threshold (currently £85k in a 12-month rolling period),
- will start with VAT reporting in 2019, and
- digital records and quarterly reporting for other taxes not starting until at least 2020.
This is such a better approach given that VAT reporting is generally done quarterly anyway. In addition, if you are selling over £85k, you really need to be able to have good quality, timely financial records to help you manage your business better.