From April 2023 MTD (Making Tax Digital) for Businesses will affect all individuals who file a self-assessment return with a turnover of more than £10k (almost everyone that files self-assessment returns.)
This will represent a massive shakeup to the way self-assessment returns are filed, and will end the annual self-assessment return, replacing it with Quarterly returns based on Digital records.
The aim is to reduce errors on returns and improve record-keeping by focusing on and enforcing submissions based on real-time digital records.
During the SEISS and Furlough scheme as so may errors and pitfalls were uncovered, HMRC for the first time, made a clear distinction in writing between seeking advice from accountants and qualified accountants that are members of a UK recognised professional body.
Proposals are being put forward to make sure the tax advice market is regulated to adhere to a minimum professional standard.
Doing so will ensure the paying customer (you, the taxpayer) is receiving proper, correct advice that can be relied upon.
At the same time, the proposal will help to reduce errors or professional negligence in the industry, which we so welcome.
Preparations are underway here to make sure we are ready for this change, and MTDfb is something we welcome.
We will now increase our partnership and promotion with QuickBooks digital tax software, and this will now become a vital requirement to remaining HMRC compliant as of April 2023.
Our advice to you is, it’s time to start preparing for this change now.
A basic minimum step we recommend is to start to separate your business/personal banking, open an account solely for your business if you have not already done so.
We also strongly encourage you to start keeping your receipts and Mileage logs; these will become vital.
Although the change is still a way off and the timeline may well be extended, we do suggest preparing now.
The COVID-19 reliefs and grants were a great way of getting individuals to sign up for personal tax accounts and sharing more data with HMRC.
Now HMRC will encourage more frequent use of that account and data.
Of course, we will be able to guide and make the transition to MTDfb as smooth as possible, but you will require digital records of income and outgoings to include on the quarterly submissions from April 2023.
There will be no room for a “well-educated estimating”, missed CIS statements, or recording employment income as self-employment thus avoiding national insurance, any more!
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