18 Oct 2016
On 15 August 2016, HMRC published six consultation documents on its Making Tax Digital (MTD) initiative. The consultations outline how the Government intends to create a ‘transparent and accessible tax system fit for the digital age’.
The consultations cover:
- How digital record keeping and regular updates will operate – the main component of this is compulsory digital record-keeping and providing quarterly ‘updates’ to HMRC, with an end of year declaration within nine months of the end of the period of account;
- Options to simplify tax for unincorporated businesses, including changes to basis periods, extending cash basis accounting and reducing reporting requirements for unincorporated businesses;
- Extending cash basis accounting to unincorporated property businesses, including non-resident landlords and those with furnished holiday lettings. There would be no turnover criteria, but tax relief on interest costs would continue to be restricted to a maximum of 20%;
- Voluntary pay-as-you-go arrangements, where taxpayers can pay what they want when they want, subject to the normal payment on account rules. In addition, regular direct debit arrangements and quarterly payments on account are also being considered;
- Changes to tax administration to effectively underpin compliance with MTD, including changes to the enquiry regime, penalties for the late submission of quarterly updates and end of year declarations and also the late payment of tax; and
- How HMRC will make better use of the information which they currently receive from third parties to provide a more transparent service for customers – mainly the regular updating of PAYE codes and coding out of bank interest via PAYE in the short term.
The consultation documents can be found here: Making Tax Digital: consultations.
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