Although Making Tax Digital has been deferred for income tax until at least April 2020, work is still going on to get the system ready in time.
An important milestone was passed with the publication on 13 September of the first draft of the detailed rules which set out precisely what information sole trader and partnership businesses will have to keep digitally, and which will form the basis of their quarterly returns to HMRC.
Businesses can now at least start to consider whether their current record keeping system will be compatible with MTD and if not, what changes have to be made.
It is worth stressing that once MTD for income tax is introduced, business will have a legal requirement to keep a digital record of every transaction which they undertake.
There is an exemption for certain high-volume retail businesses, which will have an obligation to keep a daily summary of sales in digital form.
The regulations are surprisingly detailed. They even cover, for example, what to do if somebody pays in foreign coins which the retailer doesn’t recognise until cashing up.
While we have no doubt that these regulations will need a lot of work before they reach their final form, we welcome the fact that at long last there is now some detail about what MTD for business will actually mean in practice.
For more information please get in touch with Andrew Hubbard, or your usual RSM contact.