28 June 2018 Deloitte AFM Training Day Heather Elliott Customer - - PowerPoint PPT Presentation

Making Tax Digital for Business 28 June 2018 Deloitte AFM Training Day

Heather Elliott Customer Readiness and External Stakeholder Team

Overview of MTD for Business

▪ Vision ▪ Scope of programme ▪ Who is affected and when ▪ What is MTD for Business ▪ Income Tax ▪ VAT ▪ Corporation Tax

Our Vision

Making Tax Digital is making fundamental changes to the way the tax system works – transforming tax administration so it is: ▪more effective, ▪more efficient and ▪easier for taxpayers to get it right

Making life easier in the long run

…It should do, and that should be the test of it... we’ve got to leap into the 21st century. But it’s got to work for businesses as well as for HMRC, and that’s the bit that I really get. It can’t just be something that makes life easier for the tax authorities or we collect more tax as a consequence… But equally it’s about making a much better experience and saving time for businesses, that’s really important.

Mel Stride MP Financial Secretary to the Treasury

Scope of Making Tax Digital

MTD for business MTD for individuals

Scope of Making Tax Digital

MTD for business ▪Income Tax - Self Assessment

▪ sole trader/self employed ▪ landlords

▪VAT ▪Corporation tax MTD for individuals ▪Improving PAYE through real-time triggers ▪Simple Assessment ▪Bank and Building Society Interest

Timing Unchanged

Who is affected – and when?

▪ April 2019 - VAT Registered businesses with turnover above the VAT threshold ▪ VAT businesses below £85,000 – MTD Voluntary ▪ MTD for other taxes not before 2020 ▪ MTD for income tax on a voluntary basis now ▪ The VAT pilot invite only - opened up more widely later in the year

What is Making Tax Digital?

Using MTD compatible software to ▪ Keep digital records ▪ generate the information you need to send to HMRC ▪ send to HMRC via an API * ▪ receive information from HMRC

* Application Programming Interface Interface

9

When is ‘as near to real time as possible’? Yes

Business can decide how often Close to transaction likely to reduce errors Business, agent or bookkeeper

Does that include spreadsheets? Who can keep the records?

Common queries

10

Do they have to be scanned or photographed? Can be paper

• r digital

Not compulsory – but packages may have that facility. Ask your provider. Check GOV.UK What about invoices? Where can I find out about Software

Common queries

Income Tax Pilot

▪Open to

▪ sole traders/self employed ▪ landlords rent out UK property

▪Guidance and info on GOV.UK:

Use software to send Income Tax updates Agents: use software to send Income Tax updates Software for sending Income Tax updates Help and support for Making Tax Digital

▪Quarterly updates ▪End of Year Activity

• Finalises tax position for the year
• Due by 31 January
• Liable to normal compliance checks

What is changing for income tax?

What is changing for VAT?

Things that will change

▪ VAT returns compiled by pulling data from digital records ▪ VAT returns sent to HMRC via API- enabled products and not through VAT portal

Things that won’t change

▪ VAT return frequency and payment deadlines ▪ Eligibility for VAT Special Schemes

▪From April 2019, VAT Registered businesses with taxable turnover above the VAT threshold must keep VAT records digitally, and send VAT return through compatible software

▪ VAT threshold currently £85,000

▪‘Smaller’ VAT Registered businesses can join MTD if they wish ▪There are some exemptions

Who is affected – and when?

Exemptions

▪ Insolvency – MTD is voluntary ▪ Religious Grounds – for practicing members

• f a religious society whose religious beliefs

prevent them from using computers or, ▪ It is not reasonably practicable… Each case is considered on own merits reasons might include

• remoteness of location
• disability
• age

Contact the VAT Helpline to discuss



VAT Notice

▪ Further consultation following initial publication ▪ More details and examples ▪ Some relaxations ▪Will be Published on GOV.UK later this spring

VAT Pilot

▪Live testing started in April 2018 – volunteers by invite ▪Simplest businesses first ▪More complex businesses join as the pilot grows ▪ Must have compatible software to take part

‘Functional Compatible Software’

Program, or set of compatible software programs, that must ▪Keep digital records ▪provide HMRC information and returns using the APIs ▪receive information from HMRC If a set of programs are used there must be a digital link between the pieces of software.

Example 1

▪Software

• to record sales and purchases

▪spreadsheet

• to calculate the return

▪bridging software

• to submit the return

All links must be digital

Example 2

▪ Software to

• record sales and purchases
• calculate the return
• submit the return

▪ spreadsheet to

• track of fleet of cars and

work out adjustments for fuel scale charges

OK to type adjustment into accounting software. But a digital link may reduce errors

Example 3 – VAT Group

▪ Software – three different packages to

• record sales and purchases
• calculate amounts needed for the return

▪ spreadsheet

• to compile the totals and create the return for the whole of the group

▪ bridging software

• to submit the return

Five pieces of software maintain the records, calculate return and submit to HMRC. The links between them must be digital.

Example 3 during soft landing

▪ Software – three different packages to

• record sales and purchases
• calculate amounts needed for the return
• submit the return

▪ spreadsheet

• to compile the totals and create the return for the whole of the group

▪ bridging software

• to submit the return

The links between software and spreadsheet can be

• manual. Submission of VAT return must be digital.

Getting ready

▪ Talk to your software provider or in house IT team. ▪ Talk to your accountant ▪ Talk to your HMRC contacts ▪ Take part in the pilot

Questions

Thank you for listening

Customer Readiness External Stakeholder Team

makingtaxdigital.mailbox@hmrc.gsi.gov.uk ‘Help and support for Making Tax Digital’ page is now live: https://www.gov.uk/guidance/help-and- support-for-making-tax-digital