There are many implications that rural businesses across Wales need to be aware of regarding Making Tax Digital (MTD) and HMRC. No matter what size your company is, whether it is a start-up enterprise or an established going-concern the digital revolution is underway when it comes to taxes.
What is MTD?
The MTD vision set out by HMRC is to make the tax system for businesses operate much more closely to “real time” with quarterly reporting, as opposed to the current system of reporting information on tax returns and paying liabilities long after the end of the tax year. Due to various delays the plans for the implementation of the MTD regime have been pushed back from the original timetable; some of the most difficult elements have been deferred until “at least” April 2020.
By way of a recap, under MTD most rural businesses, self-employed and landlords will be required to keep track of their financial affairs digitally. They will be required to use digital tools, such as software or apps to keep records of their income and expenditure and keep proper books and records as they go along.
Issues for the rural community
The idea of quarterly reporting is intended to provide HMRC with an accurate snapshot of the business trading performance, with summary details submitted throughout the year of turnover and expenses. The seasonal nature of farming means that quarterly updates are unlikely to provide meaningful business management information or figures from which a tax liability can be accurately estimated. For rural businesses the poor internet connection speeds and lack of broadband infrastructure in rural areas have been cited as reasons for a phased introduction of the MTD plans.
What you need to do now
There is a temptation to put MTD to the back of our minds following the revised implementation timetable; however, change is on the horizon and businesses need to be digitally ready when the time comes. All rural businesses must now start to move over to a fully compliant digital record-keeping system.
Time is now of the essence as the countdown to MTD continues.
Blog submitted by Karen Gittins of Baldwins Accounting and Business Advice.