Reminder that new tax filing rules set to begin

While Brexit continues to dominate the headlines, a reminder was issued yesterday to farmers that new requirements affecting Vat-registered businesses with a taxable turnover about £85,000 come into play on Monday. HMRC’S Making Tax Digital (MTD) initiative – described as the biggest shake-up to the taxation system since self-assessment was introduced more than 20 years ago – comes into force on 1 April and, despite calls for the move to be postponed due to Brexit uncertainties, the union has warned no extension has been granted.

And while most businesses might already submit VAT online, the new measures require returns to be submitted directly via digital accounting packages or by bridging software – and the current HMRC online portal which allows manual entry of VAT details will not be available for accounting periods which begin after 1 April.

The initiative – which has been widely criticised – will be extended to cover other areas, including income tax and corporation tax, but not before April 2020. The union said this was also likely to be the start time for Vat-registered businesses with a taxable turnover below £85,000.

Union vice-president Charlie Adam said: “If you have any questions or aren’t sure if this applies to you, please seek professional advice as soon as you can.”

Robin Dandie, head of agriculture with accountants Johnston Carmichael, however, said that there could be some benefits:

“While there is an initial investment of time and adjustment to any new system many of our clients have found online systems quicker than manual entry, which frees up time for other business critical tasks,” said Dandie.

He added that while broadband was still an issue in some areas, it was becoming increasingly accessible.

A spokesman for HMRC said although there would be penalties for failing to make returns under MTD, this would be handled with a “soft touch” in the initial period of the changeover and fines would not be imposed where businesses were doing their best to comply with the law.

He said there would be some exemptions from the requirements where it was not reasonably practical for a business to keep digital records or to file direct from accounting software – such as reasons of age, disability, remoteness of location, or where it would contravene religious beliefs.

While admitting poor broadband provision might be an issue for some, he said it was likely that where farmers could file their returns under the current system they would have sufficient bandwidth to file under MTD, adding that any current exemptions from filing online would roll over into the new system.

bhenderson@farming.co.uk