MTDfB: Its 2020 for my limited Company clients so no need to worry about them for a year or two
By the ICPA
Lots of concerns being expressed from Accountants everywhere concerning the Making Tax Digital for Business proposals following HMRC’s responses to the initial consultations, now wonderfully known as MTDfB in HMRC circles.
What we know for sure is that we actually know nothing at all about what impositions are to be placed on our Limited Company clients and how they are supposed to deal with them when they are finally announced.
We do however know that quarterly reporting of Profits is scheduled for commencement from April 2020 as opposed to the April 2018 start date for Sole Traders, Landlords and Partnerships. Which has led many to talk about buying time as it were by converting clients to Limited Companies or saying I don’t have to worry about them ‘till much later.
I’m not going to comment on the correctness or viability of incorporating a business just to delay the imposition of quarterly reporting but I will say is the supposed timesaving actually what they think?
As it stands it is correct to say that existing Companies will not be reporting quarterly profits by 2020 but assuming most existing companies are, and I believe this to be correct, Vat Registered than please remember that Limited Company or not Vat Returns, whatever they will look like then, will have to be filed via digital software NOT the gateway from April 2019.
According to the HMRC road map, which they seem determined in the face of mounting criticism to keep to, Vat Returns for all vat registered entities will have to be filed from within a digital software package so if you have company clients using spreadsheets or paper based records and you think you have plenty of time before you worry about them think again.
For your limited companies that at the moment don’t use software but are happily filing their vat returns via the gateway you are going to have to get them switched over to an accounting package that will enable them to meet their Vat Return filing obligations by filing the Return from within the software of choice by April 2019.
Are they likely to react cheerfully to this? I doubt it, are they going to be amenable to learning the new skills required by the software? I don’t know but what I do know is April 2019 will be upon us a year sooner that April 2020.