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Newsletter September 2017

Making Tax Digital (Update as at 14 July 2017)

The government has announced major changes to its Making Tax Digital for business (MTD) proposals: MTD will initially only apply for VAT registered businesses and will be mandated into HMRC's plans for quarterly bookkeeping and reporting from April 2019. MTD will not become compulsory for other business or taxes until April 2020.

Proposed updated timetable:

• VAT registered businesses, with turnover over the VAT threshold will be mandated into the MTD reporting system from 2019.
• Property landlords and small business trading below the VAT threshold will join MTD from 2020, although they may opt in to MTD earlier if they wish to do so.
• There is no news on what is proposed for companies, however the government is currently looking at reform of corporation tax.

Year      Which tax                               Who                                                              Exceptions

2019      VAT                                          Self-employed individuals who are              Business with a turnover of

                                                               VAT registered                                               than £10,000

2020      Income Tax & Class 4             Self-employed individuals and                      Business engaged in excluded

              NICs                                         landlords                                                        activities

2020?    Corporation tax                        Companies                                                     The Digitally Excluded

               Income tax & Class 4              Large partnerships                                         Insolvent business

               NICs                                                                                                               Charitable trusts

The government says that it has listened and Mel Stride, Financial Secretary to the Treasury and Paymaster General said: 'Businesses agree that digitising the tax system is the right direction of travel. However, many have been worried about the scope and pace of reforms. We have listened very carefully to their concerns and are making changes so that we can bring the tax system into the digital age in a way that is right for all businesses.'

HMRC has already begun piloting the MTD services and will continue to do so. It will start to pilot MTD for VAT by the end of 2017 with a live pilot starting in Spring 2018.