Digital tax returns every quarter?

Digital tax returns every quarter?

9:35 AM, 28th February 2017, About 5 years ago 46

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I have spoken to my accountant in relation to Digital Tax Returns and he has advised me that, Landlords will be required to do Digital Tax Returns every quarter. In other words 3 times over the course of 9 months and then final Annual Self Assessment by 31 January.digital

He has told me that, 3 Digital Tax Returns which will be done over the course of 3 quarters will require the following:

1) All Receipts to back up Expenditure will need to be attached with Tax Return.
2) Every Property Income and Expenditure will “Need To Be Separate”as currently, you lump all properties Income and Expenditure together and put one figure for each Column (Income & Expenditure) This will No longer be the case as in case if you have 20 properties you will need to fill 20 Boxes for each property.
3) So if HMRC decides to look at your accounts which you submit on quarterly basis then they can simply select the properties they wish.
4) All addresses of properties will also be required.

Although above information are already prepared my accountant which we call it Summary Of Accounts however they are not submitted to HMRC unless there is an enquiry however, regardless if there is enquiry or not such information would need to be submitted which is likely to increase accountants fees.

Any idea, if Digital Taxation is definitely coming next year? If so how well prepared you are? My accountant does all my accounting and bookkeeping, but has already indicated that, he will significantly increase his fees.

Simon



Comments

by Michael Barnes

23:22 PM, 28th February 2017, About 5 years ago

This is the first I have heard of doing a property-by-property tax return.
Please provide reference to the government publication stating this.

It is not possible, anyway, to allocate all expenses to a specific property, e.g. membership of NLA/RLA or use of home as office.

by Michael Barnes

23:46 PM, 28th February 2017, About 5 years ago

As Neil stated above, the treasury has stated that software will be available to automatically update HMRC from data entered into the software application. They state that a benefit to us is that we will have up-to-date accounts to allow us to better monitor profitability, and will not have to enter data into two systems to manage our tax and accounts.

I signed up to their 'Beta testing' programme so that I could see that the systems would be appropriate for lettings businesses.

The first system they assigned me to was essentially a tax-return filling application, with the only difference being that each income and expenditure item could be entered separately. No facilities for end of year accounts and no way to track creditors and debtors. System could only handle Cash-Basis accounting, not Accruals-Basis.

The second system allowed double-entry book-keeping (allowing creditors and debtors to be tracked) and allowed income/expenditure to be recorded per property (needed to determine if properties are performing effectively). However, it was designed for business accounts and could not handle jointly-owned properties (me and my wife) and had no facilities or plans for handling Section 24..

The Making Tax Digital team emailed me yesterday admitting that the currently have nothing available to meet my tax and accounting needs, so will not be asking me to assist further until something suitable is available.

For information I include below what I have stated as needs for the system:

I believe that the most important for landlords in general are:
a. to be able to allocate income and expenses to two or more owners of the property in equal or unequal shares.
b. to be able to handle S24 for finance costs.
c. to be able to track creditors and debtors.
d. to be able to handle non-tax-deductible expenses
e. to be able to handle capital expenses and income by property.

My needs are:
a. I want to maintain full double-entry accounts for property lettings, including BANK and CASH.
b. I want to maintain separate accounts for each property: income and types of expense.
c. I also want to maintain property-independent accounts such as tradesman accounts and business-level expenses.
d. I want to consolidate those accounts into Profit and Loss account and balance Sheet for the business.
e. Some properties are jointly owned by me and my wife; some by my wife only. This needs to be taken into account for tax return.
f. I need to be able to include both tax-deductible expenses and non-deductible expenses, and then produce P&L for taxable income/expenditure and then for the overall position.
g. I need to be able to track capital expenditure against each property, for deduction on sale.
h. I need to be able to reference invoices and receipts from income and expenditure accounts.
i. I need to be able to apportion some income and expenses across tax years, i.e. use accruals basis, not cash basis.
j. finance costs – S24 handling.

by Simon Hall

13:20 PM, 1st March 2017, About 5 years ago

Reply to the comment left by "Michael Barnes" at "28/02/2017 - 23:46":

"They state that a benefit to us is that we will have up-to-date accounts to allow us to better monitor profitability, and will not have to enter data into two systems to manage our tax and accounts".

This is where you are wrong in falling trapped into their assertions. The benefit of entered data is not for your benefit it is for their benefit as they are forming snapshot of your accounts to view any irregularities from quarter to quarter.

I have just spoken to my Accountant again and he stands by his earlier confirmation that it will be for each property as opposed to whole lump in (as current). In my opinion this will be good move as this will raise further revenue hence less possibilities of further taxes.

However I take an issue with further Accountancy Fees!

NB: RLA fees can be spread across all properties by filling Free Space Box and by providing brief explanation.

by Kathy Evans

13:49 PM, 1st March 2017, About 5 years ago

But we won't have up-to-date proper accounts as it's just a cash-based incoming and outgoing - nothing to stop anyone doing that right now, with no risk of fines for not getting the quarterly figures submitted in 30 days. Accountants have estimated the additional costs at around £500 pa for a small business (up to about £11000 for a large one!)

A nice quote:
1. It's starting April 2018.
2. We don't know what is starting, or who it will affect exactly.
3. It will be onerous and oppressive, but we don't know how onerous nor oppressive.
4. It will probably double your accy. fee, but we cannot say if it will or not.
5. It will be badly-conceived and turn into a complete and utter cluster. But it might not. Well, it will...

The survey of 500 accountants revealed nearly half (46%) put the figure at somewhere between £200 and £500. 27% thought it would be between £500 and £1,000, while 9% estimated the cost at more than £1,000.

by Luk Udav

13:52 PM, 1st March 2017, About 5 years ago

A comment on an FT article about this reflects my views precisely.
"I would have no confidence whatsoever that HMRC can get this right . Indeed this will simply add a further burden to small and micro businesses , enhance the opportunity for HMRC to fine them and I would bet that a number of those who are fortunate enough to consider retirement may well think enough is enough and go sooner rather than later ."

It will be a fiasco. A £10K p.a. de minimis! The are having a laugh

by Simon Hall

13:55 PM, 1st March 2017, About 5 years ago

Reply to the comment left by "Luk Udav" at "01/03/2017 - 13:52":

That's right Luk, it does reflect in FT article however I can not seem to find that article so Michael can then put his mind at rest.

by Kathy Evans

16:37 PM, 1st March 2017, About 5 years ago

Reply to the comment left by "Luk Udav" at "01/03/2017 - 13:52":

Exactly at 10,000 pa they wouldn't pay tax anyway

by Luk Udav

20:08 PM, 1st March 2017, About 5 years ago

Reply to the comment left by "Simon Hall" at "01/03/2017 - 13:55":

https://www.ftadviser.com/regulation/2017/01/31/hmrc-reveals-who-won-t-have-to-do-digital-tax-returns/
I don't think it will make Michael happier though.

How HMRC can spew out this drivel is beyond me. Good luck in getting my spreadsheet system linked into to their "free" software, probably written by some dolt with a 3rd in "computer studies". I presume it's really just another desperate attempt to bring forward tax receipts, done by the government with the worst financial record ever.

by Simon Hall

20:22 PM, 1st March 2017, About 5 years ago

Reply to the comment left by "Luk Udav" at "01/03/2017 - 20:08":

Luk, thanks for endorsing my comment. I agree that it does become difficult, when people only understand half of issue and then remain under false pretence but only wake up when reality hits them. It is always good practice to get yourself prepared in advance of any changes.

by Joel Davis

10:23 AM, 2nd March 2017, About 5 years ago

This is about surveillance. Secondly, the Tories do not want the man in the street to prosper.

With MTD, every transaction will be analysed and matched against other information. E.g. if you buy a packet of screws for 50p you will upload the receipt showing the date and time and place of purchase. The merchant will have to also upload data on the sale and it must match. HMRC will probably check the location data of your smartphone to see if you were really in the shop at that time plus your whereabouts before and where you went after. Plus they monitor all internet use. They will also track who you know and what they do and link it with you.

I warned this would happen as soon as online self assessment was introduced.

It is really a result of the naivety of people embracing the "online" self assessment when they had the option of a paper form. If everyone had carried on with the paper form, MTD would never be introduced.

But everyone said "Oh. the online self assessment is just so convenient more than pen and paper" and they all really love "online". So now you get what you asked for.

The best protest against this is to file your next tax returns on paper. It's really very easy if you can remember which way round to hold a biro. If millions of people do this, it may have some influence. But, I doubt people will give up their addiction to "online".


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