By Antony Fawbert on Wednesday, April 11th, 2018 in Tax
Despite an announced delay by the government, Making Tax Digital (MTD) will arrive with us very soon and will affect us all, some of you as early as April 2019. This gives us time to find the right solution for you and your business to get ready for digital services. This may mean working with us and sharing your data securely through our secure portal online or it may mean setting up secure digital accounting software with us. Either way, it is time to act, be organized and ready for digital tax.
MTD will change the way you work. MTD aims to modernise the tax system in the digital age and will make your interactions with HMRC digital and more frequent, using the secure gateway or portal of a professional agent, such as ours or using secure digital accounting software. As reporting to HMRC is likely to be more frequent for everyone, possibly on a monthly or quarterly basis, this will require real time digital record-keeping and real time digital reporting of income to HMRC. It will inevitably mean more proactive involvement with us as your agent and accountant.
MTD will start with VAT registered companies, who must be ready for digital services by April 2019, hence our push for digital records. MTD will then move quickly to personal tax and other company taxes thereafter.
For directors, MTD will have a big impact on dividends. You will be required to declare report dividends to HMRC at the time you declare them. Any payments to shareholders not backed up by a dividend declaration filed online will be presumed to be an unlawful loan to director, which, if not repaid within 9 months, will trigger additional tax and maybe benefits in kind on loans to directors.
In a nutshell, the government is tightening its tax reporting for everyone. Honest and efficient taxpayers and businesses have nothing to fear from more regular involvement and reporting. But the days of last minute poor record keeping, paper records, retrospective accounts filing and dividends after the event, are gone.
We have been working on this for some time and are prepared. We have liaised with digital software providers and secure hosted services and we are ready. It is now time to have an open and honest dialogue with you as our clients because our involvement with you and HMRC will be more frequent and therefore fees will rise, especially for those of you who avoid this digital modernisation. We can try to limit or offset the rise in costs to you with digital efficiency – so by offering you access to our website, secure portal, and software. In fact, moving to digital services is an opportunity to improve your business: business to business and business to customer interactions will all move more and more to the cloud. The new secure accounting software offers you and your customers a new way of working.
We live in a global economy and, whatever our individual views are on Brexit, that is largely a parochial side-show. The reality is it is becoming harder and harder to make a living whether we are in or out of Europe as artificial intelligence, online services and emerging economies give us all a run for our money. New ways of working are worth investing in.
We can provide support with the transition to digital services for you, your business and your family and we will be contacting you separately and individually to discuss your digital plan. And beyond MTD, we offer a diverse range of services. I look forward to helping you to grow and realise your business, by providing that high-value advice beyond MTD, to those wishing to invest and grow their wealth further, provide for their retirement and make provision for themselves and their families and dependants because I believe this is what this firm does best and what clients appreciate the most.
So in short MTD is here and it is an opportunity. There is no escaping the fact that the government if getting tougher and more efficient in capturing data in a more timely and transparent manner. Please keep an eye on our website at regular intervals once it becomes live as I propose to make this the medium through which I keep clients up to date on developments not only on this subject but other areas of interest and importance.