By Hayley Robins, Senior Accountant at Hive Business.

Back in August, we told you about HMRC going digital and at that time they were asking for feedback on their proposed plans.

There has been a lot of controversy and discussion surrounding HMRC proposals but the consultation period ended on 07 November and HMRC have now considered the responses (all 3000 of them) and released an update on their Making Tax Digital (MTD) system.

Here are the key announcements you need to be aware of:

Threshold

Originally, HMRC had indicated that MTD legislation would only apply once your income exceeded £10k…however they have now said:

“Given the range of views on this matter…the government has decided to take a little more time to examine these issues, alongside their fiscal impact. A decision on this will be made before the legislation is laid later this year.”

This is still up in the air for the time being but will be clarified before the MTD legislation appears on the Finance Bill in July.

Timeline

HMRC haven’t backed down and have confirmed that they still intend to impose quarterly submission mandatory for unincorporated businesses in April 2018.

Cash Basis

The threshold to submit your information on a simpler cash basis (recording income and expenditure on the date it hit the bank rather than working out what date it related to) will be extended to £150,000.

Property companies will also now be allowed to use the cash basis (providing their income in below £150,000).

Capable Software

Apparently, HMRC have been working with 18 software companies and five of these developers will have a product available before April 2018. HMRC have mentioned that they don’t expect this to be any sooner than February 2018. For more information on the delayed implementation of Making Tax Digital follow the link for the latest update.

Penalties

There will be a 12-month soft landing to become familiar with the changes before any penalties for late submission will be applied. HMRC will consult again in the Spring on the penalty model.

Whilst it’s still not entirely clear how the MTD system will work on practical level (and I don’t think HMRC are even sure about this yet) what is clear is that checking in on your finances once a year, as you may have been doing, is not good enough in today’s fast moving climate. 

Our best practice advice which we have been recommending will allow seamless compliance, get in touch to get a head start and get your finances up to speed. Call us on 01872 300232 or email us at hello@hivebusiness.co.uk.