Making Tax Digital
VAT and quarterly reporting timetable at a glance
In a regular timetable update for HMRC’s Making Tax Digital, CCH Daily sets out the key dates for the start of VAT quarterly reporting for those above the £85k threshold and the subsequent year end reconciliation tax report. Full rollout of quarterly reporting has been delayed until 2020/21 tax year at the earliest. This list will be updated regularly to reflect any changes to reporting requirements
VAT reporting for businesses over £85,000 VAT threshold
Start date: 1 April 2019
All companies over the VAT threshold of £85,000 will have to start reporting VAT returns via Making Tax Digital from 1 April 2019. For the latest progress on finalising the rules and ongoing consultation on plans, due to close for comment on 16 February, read Making Tax Digital for VAT: how will it work
VAT-paying unincorporated businesses with turnover above £85,000, equivalent to VAT threshold
Start date: 1 April 2020 (at the earliest, details not yet confirmed by HMRC/Treasury)
This group includes unincorporated businesses, self-employed people, sole traders and landlords. From 1 April 2020, they will have to start quarterly reporting if they have profits chargeable to income tax and pay Class 4 national insurance contributions (NICs).
Unincorporated businesses, including landlords, with turnover between £10,001 and £85,000 (VAT threshold)
Start date: 1 April 2020 (at the earliest, details not yet confirmed by HMRC/Treasury)
Sole traders, self-employed people and landlords between the £10,000 exemption threshold and the £85,000 VAT threshold will have to start reporting on a quarterly basis from 1 April 2019. Currently, they report via self-assessment (if they have profits chargeable to income tax and pay Class 4 NICs (ie, turnovers below VAT threshold)).
From 1 July 2017, automatic tax code adjustments will kick in, designed to prevent PAYE under and overpayments.
From 1 April 2019, those below the VAT threshold will have to start reporting all VAT payments through Making Tax Digital system.
Incorporated businesses
Start date: Not yet confirmed
HMRC has yet to release any consultation or information about its Making Tax Digital regime and timetable for incorporated businesses, although this is likely to follow the proposed 2020/21 rollout for smaller businesses to allow HMRC IT systems to prepare for the expected complexity.
Businesses paying corporation tax
Start date: 1 April 2020 or later
From 1 April 2020, quarterly reporting starts for businesses paying corporation tax (upper threshold still to be confirmed).
Partnerships up to £10m
This group is partnerships, including small and mirco partnerships, up to small firms such as accountants, architects and legal practices, including LLPs.
Approximately 400,000 partnerships will have to report their tax positions and obligations through a nominated partner under Making Tax Digital from 1 April 2018.
Through their nominated partner, partnerships will fulfil the obligations of Making Tax Digital, maintaining digital records and providing regular updates on behalf of all the partners.
Each partner’s estimated income would be based on the profit allocation as reported to HMRC. As a result, each partner will not need software or, maintain their own digital records and regularly update HMRC unless they have other business interests.
Large partnerships over £10m turnover
Start date: 1 April 2020 or later
Complex partnerships – those with turnover of £10m or more – will be required to start keeping digital records and provide quarterly reports for income tax from 1 April 2020.
There is, as yet, no upper limit for taking part in Making Tax Digital for partnerships, although HMRC has suggested an exemption threshold for larger businesses could be put in place as their affairs become too complicated, and a similar measure could be taken for partnerships.
Large corporation taxpayers over £10m turnover
Start date: 1 April 2020 or later
Large corporation taxpayers (those with turnover of £10m or more) will report through Making Tax Digital from 1 April 2020.
There is, as yet, no upper limit for taking part in Making Tax Digital for businesses, although HMRC has suggested an exemption threshold for larger businesses could be put in place as their affairs become too complicated.
Agents and tax advisers’ testing in beta – full VAT pilot still not confirmed
Start date: 1 May 2017 (only for selected software customers) – no details about full 12-month pilot pre-launch of mandatory quarterly digital VAT reporting
Unlike in the early days of the Making Tax Digital plan, HMRC is now reaching out to key players, including accountants, agents and tax advisers.
The testing of Agents Services Accounts began with three or four agents on 1 April 2017. Each practice will need one account across the firm’s offices, regardless of their locations. Agents and tax advisers will have to create a Government Gateway credential, with existing clients transferring to a newly-established Agent Services Accounts which will be mandatory for HMRC access under Making Tax Digital.
This information was compiled from HMRC notifications and consultation documents. It is subject to change depending on government announcements. Correct at time of publication