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Comply or be caught out!

If you are a small business you may want to read on!

There goes that reminder again! Accountants beware, Business owners beware. What the government has been pushing for and are you ready?

No loopholes or escape routes here I’m afraid. But good honest business solutions that enable small, medium and large organisations to keep track and monitor their business finance, expenditure, costs and investments.

You may have been nagged by your accountant over the past 2 years that MTD is coming! So do you have your books in order? Are you ready? Or do you still have some questions that need answering to help you be prepared?

So here is what will happen:

If you are a VAT registered business with a taxable turnover above £85,000, you will already be aware of the need to keep digital records and, using compatible software, adhering to HMRC’s compliance requirements of digitally filing your VAT Returns usually (but not always) on a quarterly basis. This is called Making Tax Digital (MTD) for VAT.

There are some businesses who voluntarily register for VAT. Usually this is because they only deal with VAT registered clients and, by being VAT registered, that business can claim the VAT back on any expenditure they have incurred. These businesses, at present, are not compelled to follow the MTD for VAT rules, although around 30%, to date, have voluntarily done so. However, the Government has just announced that all voluntarily VAT registered businesses must also be MTD for VAT compliant as regards the first VAT Return starting on or after April 2022.

Support for Small Businesses

It has always been a long-held goal of Government to bring as many taxpayers, be it the self-employed, property landlords or corporates, into the MTD regulations. This aspiration has been held up due to a combination of General Elections, Brexit, Covid-19 and software challenges. However, from April 2023, the Government has stated that the self-employed and landlord businesses, with a turnover in excess of £10,000, will need to follow the Making Tax Digital for income tax rules.

This will mean keeping digital business records. Those taxpayers will also need to digitally file details of their business income and expenditure, using compatible software, on a quarterly basis, before submitting a final declaration instead of the usual Self-Assessment Tax Return. Failure to comply with the MTD rules will ultimately result in penalties being imposed.

TIP!

If you are one of the taxpayers who could be caught by these radical administrative tax changes please give us a call. The sooner you prepare for these changes the better. We can help guide you through the MTD processes to be ready and primed, in good time, to meet your MTD compliance date whether that is April 2022 or April 2023.

You can call us on 01332 270906. Alternatively, leave us a message HERE.