UPDATE: HMRC’s Making Tax Digital to be extended to more businesses

The digitisation of business and personal accounts reporting to HMRC is coming soon for businesses below the ©1999 - Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® - UPDATE: HMRC’s Making Tax Digital to be extended to more businesses | LandlordZONE.

UPDATE: HMRC’s Making Tax Digital to be extended to more businesses

The digitisation of business and personal accounts reporting to HMRC is coming soon for businesses below the VAT threshold.

It is now less than 12 months before those VAT registered businesses with turnovers below the VAT threshold will have to report following the (MTD) rules. If you fall into this category you need to start planning for MTD now.

Currently only VAT registered businesses making taxable supplies in excess of the £85,000 VAT registration threshold are mandated to comply with Making Tax Digital (MTD) rules.

Those rules require business to keep digital business records and send VAT returns using software that is compatible with MTD.

MTD for VAT is now being rolled out to all VAT registered businesses from April 2022 which may cause some businesses and the self-employed who are VAT registered but below the threshold to consider deregistering to avoid having to comply with MTD for VAT.

If you decide to do so you will need to complete Form VAT7 and account for output VAT on the market value of stock and assets still owned at the date of deregistration. This is where input VAT has been reclaimed on those assets.

There is however a £1,000 minimum which means that output VAT does not need to be accounted for where the combined market value of the assets is less than £6,000.

Unfortunately, deregistering for VAT will not necessarily avoid MTD as the requirement to keep business records digitally will be introduced for income tax from April 2023.

From then MTD for income tax will apply to businesses with gross income in excess of £10,000 a year which will include property landlords as well as traders and professionals.

The Making Tax Digital deadlines:

  • April 2019: VAT-registered businesses with a taxable turnover over the VAT threshold (£85,000) need to keep digital records and submit digital VAT returns using compatible software.
  • October 2019: more complex businesses such as trusts, not for profits and public bodies who were deferred need to comply with Making Tax Digital
  • April 2022: MTD will be compulsory for businesses with a turnover below the £85,000 VAT threshold
  • April 2023: MTD will apply to all taxpayers who file Income Tax Self-Assessment returns for business or property income of more than £10,000 a year

HMRC says that Making Tax Digital was introduced to get small businesses and the self-employed to keep and complete digital tax records and submit digital returns using compatible software. The eventual goal is for HMRC to go completely paperless.

HMRC argue that going digital will be “easier for individuals and businesses to get their tax right and keep on top of their affairs.”

In 2015 HMRC introduced the personal tax account for everyone, which can be accessed online and which is a digital tax record which makes it easier for individuals to manage their tax affairs.

Not acceptable

Eventually, paper records will not be acceptable to HMRC and will not meet the requirements of the UK tax legislation.

When you start to use Making Tax Digital for your business and Income Tax you will need to use appropriate software approved by HMRC. This lets you send Income Tax updates to HMRC and keep records of all your income and expenses.

If you’re already using software to keep records, you need to check if your software has been approved, otherwise you will need to transfer your existing accounts to a software package that is compatible with Making Tax Digital.

©1999 - Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® - UPDATE: HMRC’s Making Tax Digital to be extended to more businesses | LandlordZONE.

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OPINION: ‘Property gurus’ and their high-risk schemes are a ticking timebomb

Last week the Financial Conduct Authority (FCA) highlighted its efforts to protect people from the dubious returns ©1999 - Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® - OPINION: ‘Property gurus’ and their high-risk schemes are a ticking timebomb | LandlordZONE.

OPINION: ‘Property gurus’ and their high-risk schemes are a ticking timebomb

Last week the Financial Conduct Authority (FCA) highlighted its efforts to protect people from the dubious returns offered by ‘high risk’ investment funds.

LandlordZONE editor Nigel Lewis

The FCA wants to address harm to consumers from investing in inappropriate high-risk investments because many consumers don’t understand the risks involved, which can lead to “significant and unexpected losses”.

But sadly its remit does not include property investment, unless it is via a regulated fund, and even then most of its efforts are about how they are marketed.

A significant number of dodgy property gurus who preach how to make a living from, or recommend investing in, high-risk schemes have rushed into this regulatory void, muddying the reputation of the overall sector and its above-board operators.

And ‘preach’ is the right word. Level-headed and usually sceptical people who attend these courses, often in church-like venues led by a fire-and-brimstone style gurus, are persuaded to part with large sums on the spot.

Fees range from a few hundred pounds to the many thousands for courses that often counsel attendees to enter risky rent-to-rent contracts or put significant sums into perilous buy-to-let properties or developments.

The reason that the FCA has not been enabled to regulate schemes like this, even though some are as precarious for investors as the ‘high-risk funds’ the FCA covers, is that there has yet to be a high-profile scandal.

When one of these ‘get rich quick’ schemes does blow up horribly, regulators such as the FCA and the government cannot say they weren’t warned.

In the absence of regulation, Google searches are the only thing preventing people from losing life-changing amounts of money, where they will hopefully discover the handful of pages, forums such as Property Tribes and the Danny Butcher Foundation.

vanessa tribes

“Vanessa Warwick, co-founder of Property Tribes (left) says: “In the world of ‘get rich quick’ it only works if someone ‘gets poor quick’, namely the  mentees paying for a ticket to see a unicorn.

“The interesting thing is that it is easier to fool someone than to convince them that they have been fooled.

“They believe the Instagram lifestyle of flashy cars and homes and never question anything the guru claims, such is their desire to believe that there is a pot of gold at the end of the rainbow.

“Many of these people end up financially worse off and, as the sector is unregulated, there are no real routes of redress or they cannot afford to take legal action. Lives have been ruined so I applaud Landlord Zone for highlighting these issues and risks.”

As the Danny Butcher Foundation points out, this used to be a cottage industry but it is rapidly expanding into a multi-million pound sector, helped by historic low interest rates which are persuading many people to look for new places to grow their savings.

LandlordZONE is aware of at least one training academy that has dozens of risky property investments under way underpinned by investor cash which, should it all go wrong, will affect hundreds of people.

The troubling fact is that, as is always the case, the government’s gaze will only fix on this problem once millions of pounds have been lost.

Read more about the Danny Butcher Foundation.

©1999 - Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® - OPINION: ‘Property gurus’ and their high-risk schemes are a ticking timebomb | LandlordZONE.

Source : Landlord Zone More   

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