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Next steps for Making Tax Digital
31 January 2017
Businesses that cannot go digital will not be required to do so, says HMRC as it released more details about how it plans to proceed with digitising the tax system through its flagship Making Tax Digital.
Following extensive consultation HMRC said businesses will now be able to continue to use spreadsheets to record receipts and expenditure. These will be linked to software what will automatically generate updates and send them to the taxman.
Under MTD free software will also be available to the majority of the smallest businesses.
Customers will have at least 12 months to become familiar with the changes before any late submission penalties will be applied. HMRC has promised it will consult again in the Spring of 2018 on the new penalty model.
When it comes to self-employed businesses and landlords with a turnover under £10,000 a year will to have to keep their records digitally or make quarterly updates, but can do so if they wish. There are plans to extend the option to account for income and expenditure on a simple ‘cash in, cash out’ basis. This should help an extra 2.5m self-employed businesses and unincorporated landlords.
Charities (especially the smaller ones) will also breadth a huge sigh of relief as they will not have to keep their records digitally or make quarterly updates.
HMRC said that it is still prepared to look at initial exemption thresholds and deferring the changes for some small businesses alongside their cost, with final decisions to be made before legislation is introduced later this year.
So keep watching this space.
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