MTD Quarterly Tax Returns for Businesses, Self Employed, Landlords Warning

Make no mistake, this is big and this happening right now. 

HMRC has been warning all limited companies, the self employed and landlords that Making Tax Digital (MTD) is coming.  MTD has been with us since April 2019 for payroll and now it is coming for VAT registered, VAT unregistered businesses, the self employed and landlords.

Many companies were forced to move to MTD and use external, independent software for Real Time Imformation (RTI) payroll reporting in 2019, also took the opportunity to move to MTD for bookkeeping and VAT returns.

That said, businesses have not been forced to file under MTD until now.  HMRC issued yet another warning this week that MTD is ‘hotting up’ and deadlines are approaching.

• 1^st November (Quarterly VAT Returns): i.e., right now for the trading quarter 1^st August 2022 to 31^st October 2022, your next VAT return must be via external bookkeeping software as you HMRC VAT Online account is no longer available.  Your time is already up and you need to get your books in order and digitised right now for this quarter’s trading.  That's just 2.5 months away.
• 15^th May 2023 (Annual VAT Returns): Businesses that file yearly rather than quarterly VAT returns will still be able to use their VAT online account until 15 May 2023.  That's only 9 months away.
• 6^th April 2024 Making Tax Digital for Income Tax Self-Assessment (MTD ITSA) for Businesses and Landlords
• All businesses (including non-VAT registered), the self employed and landlords with trading income and/or rental income in excess of £10,000 must move to MTD ITSA by 6^th April 2024.
• Quarterly ITSA (income tax self-assessment) Returns from April 2024.

Comment

This is not a joke online friends.  MTD is going to hit some people very hard so, it makes sense to start planning now. 

It makes sense in this digital world that rather than paper, annual and manual VAT returns as well as annual returns for income tax self-assessment, for HMRC to force this to quarterly software submissions as it means tax revenue will be collected immediately rather than making two payments on account and then a final balancing payment many months later:

Current Tax Year 6^th April 2022 to 5^th April 2023

• Month 10 (31^st January 2023) – your first self assessment payment on account.
• Month 16 (31^st July 2023) - your second self assessment payment on account.
• Month 22 (31^st January 2024) – your final balancing payment for income taxes due from April 2022 – April 2023). 

Paying your final tax bill some 22 months after that tax year started makes no cash flow or financial sense for HMRC.  With MTD ITSA starting 6^th April 2024, HMRC estimates it will be collecting tax due on revenue from 4.5 million people within 3 months of that trade profit and/or rental profit being made rather than 22 months.