Making tax digital – the rural effect

9 November 2016

The Government plans to introduce a quarterly online tax return to replace the annual one, as part of its “Making Tax Digital” programme. It is planned to introduce it for the smallest businesses first, without a comprehensive  and lengthy testing programme.  From 6 April 2018, the smallest businesses, and landlords with gross income over £10,000 per year, will be required to report receipts and payments directly to HMRC, online, although it is not yet known if this will entail a summary (similar to a VAT return) or if each separate transaction will need to be recorded.

The government’s consultation on the outline proposals ended on 7 November. Effectively, it looks like four quarterly self-assessment tax returns will be required, and must be submitted online. The penalty regime has not been publicised, but HMRC say they will adopt a “light-touch” approach.

Rural-based businesses must be relieved to hear that, as it becomes increasingly obvious that the government may not achieve the fast and reliable broadband availability they promised country-wide by 2020. The CLA have expressed concern about the poor digital connectivity throughout rural areas, where uploading also takes much longer than downloading, and reminded the Government of the problems when the Rural Payments Agency digitised the Basic Payment System for farmers.

Rural businesses who have good accounting software will already be better placed to submit quarterly returns,  but for all small businesses this is another burden and  a further time-consuming and potentially costly exercise. We await HMRC’s response to the consultation feedback, and hope that the Chancellor will delay implementation at least until better digital connectivity can be guaranteed across the countryside. We will of course keep you informed of any progress via this dedicated blog.

In the meantime, if you would like to discuss how this might affect your business, or to look at software issues generally, please get in touch with your local rural UHY adviser, complete our online contact form or telephone Margot Madin, the author of this blog, on 0115 938 8757.