Newsletter issue - February 2017.
Following representations from the House of Commons Treasury Committee, HMRC have published proposals to undertake a year-long pilot of the Making Tax Digital programme. HMRC are committed to having Making Tax Digital fully operational by 2020, and a pilot scheme is expected to run from April 2017 until April 2018.
Software developers have been invited to participate in the pilots, by asking their clients to sign up to trials. In the first six months of 2017, testing is scheduled for digital reporting of income from letting property, while participating taxpayers will be asked to report additional sources of income through their digital tax accounts.
Under current proposals, quarterly reporting will commence from April 2018 for landlords and self-employed, with micro businesses joining the regime further down the line.
Commenting on the proposals, Chartered Institute of Taxation (CIOT) President, Bill Dodwell said that the Institute is also pleased that the Committee agrees that the threshold for Making Tax Digital and quarterly reporting should be raised substantially from the proposed £10,000. A consensus is growing that the VAT threshold of £83,000 would be a more sensible cut off point. However, he also said that HMRC will need to consult thoroughly with businesses, their tax advisers and professional bodies and relevant charities in the period up to full implementation to ensure it works for HMRC, taxpayers and their representatives.
By 2020, businesses and individual taxpayers will be able to register, file, pay and update their information at any time of the day or night, and at any point in the year, to suit them. For the vast majority, there will be no need to fill in an annual tax return.
Further information on Making Tax Digital can be found on the Gov.uk website at https://www.gov.uk/government/publications/making-tax-digital.
