HM Revenue and Customs (HMRC) has written to landlords with furnished holiday lets and invited them to take part in trials of its new Making Tax Digital (MTD) system.
Moreover, some people believe that this suggests that this cohort may be among the first tranche of businesses formally required to submit tax details online from 2021.
Those selected for the next MTD trial will be required to find and sign up for MTD-compatible software to maintain an online record of their income and expenses in the 2019/20 financial year. During the trial, the landlords must submit digital records to HMRC every quarter, along with a final annual summary required by 31 January 2021.
However, landlords are not the only ones being encouraged to trial the MTD system. HMRC is now allowing sole traders to test the software too, following a recent trial phase with VAT-registered businesses.
The Government confirmed earlier this year that it would not mandate MTD for any new taxes or businesses in 2020, thereby ensuring that the pace of change occurs at a manageable speed, particularly for small businesses.
As HMRC’s letter points out, the improved accuracy and support that digital software provides, and the fact that information is sent directly to HMRC from the digital record will reduce the amount of tax lost to these avoidable errors.
Some commentators believe that there are many advantages which will arise from the proposed changes. As one pointed out, many landlords lose claimable receipts and can struggle to keep records in good order.
He added that MTD will enable landlords to record receipts instantly, which will save time, improve accuracy and make it easier for them to keep an eye on the profitability of their portfolios.
Here at Macalvins, we have embraced the digital revolution and are experts in helping to prepare our client’s businesses for making tax digital. Contact our team today to find out what we can do for you.