In August HM Revenue & Customs (HMRC) issued the first wave of consultation documents on its Making Tax Digital (MTD) initiative.
This first wave of consultation documents set out the Revenue’s plans for the implementation of MTD for the smallest businesses and, as expected, a large number of small businesses will need to report on a quarterly basis using ‘designated software packages.’
Only the very smallest businesses – those with an annual turnover of less than £10,000 – will be exempt from these requirements.
All other businesses will need to use designated software packages, which HMRC says will include free-to-use solutions, to submit details to the Revenue every three months. Details of the packages that will be available have not yet been made clear.
At the end of the tax year, businesses will need to make any necessary adjustments to the returns they have made during the year.
HMRC has said that it intends to fully implement MTD by 2020, but the Revenue will start to roll out the changes to a small number of businesses in 2018, while some test trials may be conducted as early as 2017. Consultations on the implementation of the scheme for larger businesses are set to be published in the autumn.
We will continue to monitor these consultations and report on their progress.