With the general election only weeks away, the government has now dropped a number of clauses from the Finance Bill
Clauses dropped include those relating to Making Tax Digital.
With the implementation of Making Tax Digital (MTD) originally scheduled to start for unincorporated businesses, and landlords, with turnover above the VAT threshold from April 2018, there was little time to prepare and there have been many critics, including myself, who consider the implementation to be rushed, not properly tested, and lacking sufficient detailed information. Some businesses may consider the exclusion of MTD from the bill as a relief. However, the government’s financial secretary has said in a statement that if re-elected they will bring in legislation ‘at the earliest opportunity’ in relation to matters dropped from the Finance Bill, including Making Tax Digital.
There is no mention of any intention to re-schedule the introduction of MTD and therefore businesses would be prudent to assume at least for now that the original timetable will stay.
Of course this might all change if Theresa May and the Conservatives fail to win the election on June 8th, but given the local election and mayoral results on May 4th a continued spell of office for the Conservatives and their policies does seem a very likely outcome.
Making Tax Digital will impose new practices
Many business owners have historically left completion of their accounting records for a ‘rainy day’, the day when they get some extra time, and this often means the records are left until after the year has been completed. Making Tax Digital will impose new practices, meaning that business owners will need to use software so that their records are kept electronically, and up to date. Fortunately, those above the VAT threshold will in most cases already be submitting quarterly VAT returns and much, if not all of the record keeping will be done already, albeit potentially on paper. Quarterly MTD submissions to HMRC will hopefully align with the VAT quarters to save additional work.
For those businesses who don’t submit VAT returns, and those that want to be ready for the new world, they will need to ensure that they have suitable software in place, people who know how to use it, and good routines to ensure all the accounts papers and records are posted electronically. Business owners may start to use the accounts software themselves but I suspect that in the majority of cases they will prefer, as now, to focus on their day to day business operations instead.
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Cloud based solutions such as Sage….or Xero could be good options
Fortunately, there are some forward thinking bookkeepers and accountants ready to assist their clients with this. Clients can seek assistance on choosing the right software, and will be offered training on how to use it. Cloud based solutions such as Sage Live, or Sage One, or Xero could be good options as these can automate some of the work, and allow the flexibility for clients to choose which elements of their record keeping they do themselves, and which elements they want their bookkeeper or accountant to support them with.
extensive tools and support at their fingertips
Bookkeepers and accountants like Pennine Accounting Limited, licensed by the Association of Accounting Technicians, particularly those that are members of Sage Accountants Network have extensive tools and support at their fingertips with excellent product knowledge, discounts on Sage software, and a wealth of experience to help businesses implement the best cost-effective process to meet this forthcoming HMRC requirement.
It will take some time for any new process to ‘bed-in’ and even businesses deferred until April 2019, such as those below the VAT threshold and incorporated businesses, should plan the introduction of new accounting procedures now. Unincorporated businesses and landlords with turnover above, or close to the VAT threshold really have no time to delay. Contact enquiries@pennineaccounting.co.uk for a free ‘Making Tax Digital’ business readiness review and implementation plan.
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