Making Tax Digital – a reminder for VAT registered traders
From April 2019, certain self-employed businesses will be required to file VAT returns direct to their online personal tax accounts with HMRC. Eventually, all income and allowances will be kept in the digital account that HMRC are setting up to calculate your tax liabilities. HMRC are still hedging their bets, but it is unlikely that business accounts information will need to be uploaded before April 2020.
How will this affect your tax affairs?
It will shift the emphasis from reporting historical data on a tax return or VAT return, to uploading real-time data to your personal tax account.
Banks, building societies, pension providers and employers will be required to “push” information to HMRC. And you will be obliged, in most cases, to upload quarterly information to HMRC on the profitability of your business or property letting income business.
Q: How will I have to send information; all I have is a spreadsheet?
A: The upload will have to be done electronically and if you already use bookkeeping software that we have recommended, this facility will be in place in good time. If you haven’t considered the use of accounts software, please call. We can help you get everything ready before the upload obligations begin from April 2019 when VAT returns will need to be filed in this way.
Q: How will I know if the information I am sending means I will pay too much tax or VAT?
A: Once the changes are fully implemented, certainly not before April 2020, we will be offering a service to check your accounts data for you before it’s uploaded. This check will also include a review of VAT uploads. We will also check your personal tax account at least once a year (at the end of each tax year) to make sure that the income tax liability assessed is correct. The year’s end review will include a look at ideas to reduce your tax bill, if appropriate planning opportunities are available.
If you are likely to be affected by these changes and are still undecided which accounts software to use, please call so that we can get you prepared.
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