Business Taxpayers Quarterly Reporting
HMRC intend that businesses (corporates, the self-employed and partnerships), and including both trading businesses and landlords, will be required to keep track of their tax affairs online, updating HMRC at least every three months via a digital tax account. The rules will not apply to employees or pensioners unless they have secondary income from self-employment or property of more than £10,000 a year. This requirement will be phased in starting from 2018/19 for self-employed businesses and landlords.
There is little detail as yet as to how this quarterly reporting will operate in practice, in particular, what information will be required, and whether it will fully replace the tax return.
It is not clear whether earlier payments and/or more frequent payments will also be needed in respect of business and rental income, but a discussion paper on this subject issued alongside the Making Tax Digital roadmap sets out HMRC’s initial thinking on this matter. Budget 2016 confirmed that a ‘pay-as-you-go’ option for tax payments will be made available by 2018.
Next steps
We expect there to be further announcements and consultations over the next couple of years as the details of the system evolve. In particular consultation documents are expected to be published in 2016 covering the following:
Further details of quarterly reporting
The tax administration framework
Access to third party data
Tax payment dates
We will of course keep clients updated as more information becomes available.