Making Tax Digital: 6 tax returns required each year!
HMRC’s 6 Making Tax Digital consultation documents have been open for review and comment for several weeks now. As time has passed, it has become ever more apparent that there are enormous changes ahead for all taxpayers affected; initially the self-employed and landlords.
Further review of the documents and discussions with HMRC have revealed that in addition to the 4 ‘real time’ quarterly submissions, a year end submission will be expected. This will enable accounting adjustments, such as stock, WIP accruals and so on, to be made, so that HMRC have details of the accounting profit for the business. In addition it will involve advising HMRC of the tax adjustments to the accounting profit, for example making claims for capital allowances.
However, this is not the end of the story, as for many self-employed individuals, and most landlords, this will not be their only source of income during the tax year. There will therefore need to be a further submission to HMRC to finalise the tax liability. So in fact there will be 6 interactions required with HMRC each year, to conclude each taxpayer’s affairs, without taking into account any payments due!
This will no doubt be a complete shock to the system for those taxpayers used to dealing with HMRC just once a year!