Clearview National November 2019 - Issue 216 | Page 74

BUSINESSNEWS
Smaller Business
The nuclear explosion of
MTD for Profit and Loss
If you thought MTD for VAT was bad just wait for MTD for profit and loss.
Benjamin Dyer of Powered Now looks at what is coming next from HMRC.
THE BIG PICTURE
Before diving into what will be the next
stage of Making Tax Digital (MTD), it’s
worth looking at the overall picture of the
programme.
MTD is a massive years-long programme
to make all things related to tax move into the
digital age. This should eventually result in
many improvements.
For instance, at the moment if you do a
personal tax return, you tell HMRC how much
interest you have received on savings. But a lot
of this information is actually supplied direct to
HMRC by banks, building societies and other
financial institutions. Similarly, you have to
provide details of income despite the fact that
much of it is already known under the PAYE
scheme. This is crazy, you have to dig out the
information, HMRC then check it against their
records and if there is a discrepancy HMRC
need to investigate.
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It would be much better for HMRC to
put all of this into your tax return in the first
place. Then the individual only has to add the
information that HMRC don’t know about.
It’s an example of what MTD is trying to
achieve.
‘move into the digital age’
A variety of reasons have been given by
HMRC for the MTD project, but my guess
that these include:
• To collect tax that is currently being
dodged
• To reduce cost within HMRC
• To make life easier and more efficient for
businesses and individual tax payers
So, unless you’re a tax dodger, there are
some laudable aims for MTD. But there is
a mountain range to be climbed before this
promised land can be attained.
OTHER COUNTRIES
Since a number of countries have similar
programs to MTD, and several are years
ahead, the programme should be possible.
WHAT AREAS OF TAXATION
WILL MTD IMPACT?
MTD is planned to address every area of
taxation for both individuals and companies.
MTD for VAT is already rolling out, with the
compulsory period for returns starting on 1st
April 2019. MTD for profit and loss (covering
corporation tax and sole trader income tax) is
the next big business change.
WILL MTD BE ABANDONED?
The chances of MTD being abandoned
are extremely slim. During my lifetime, the
march of computers has seemed inevitable.
Slowly but surely, computers have become a
critical part of every aspect of life. Few people