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Tax Payments

Why do we need quarterly updates with Making Tax Digital (MTD) | Tax Advice MTD | Advice on Making Tax Digital
Why do we need quarterly updates with Making Tax Digital (MTD)? 758 513 Stepping Stones Accountancy

Why do we need quarterly updates with Making Tax Digital (MTD)?

As the Making Tax Digital (MTD) scheme continues to gather momentum there are many business owners still unsure of their commitments. However, the requirements can be broken down into 4 key measures which determine why taxpayers (even those who may have a small turnover as little as £10k) are required to provide a breakdown of income and expenses. This needs to be done via an online accounting platform which is approved by MTD and submitted every quarter.

Keeping up to date

By submitting a quarterly return, a business is keeping up to date with their returns and complying with their commitments to MTD. The regulations state that a quarterly filing deadline needs to be submitted online.

More accurate provision for tax payments

Any profit which is reported within the quarterly updates will allow the HMRC to provide an estimate of the tax payments a business might have to make during the tax year. The clear benefit of this is that a business will know how much tax they need to pay and when they will need to pay it, thus allowing for accurate budgeting.

Vital business analysis

Whilst a small business might think their quarterly tax return is only important to them, it is also a very useful tool for the HMRC. Being able to evaluate the data received from tax returns enables them to provide some informed and critical business analysis in relation the state of the economy.

Penalties for late submissions

To ensure businesses recognise the importance of quarterly submissions, HMRC will be implementing penalties to anybody who fails to comply. Penalties will be based around a points system, where any late submission means points added to an account. When a designated number of points are accrued a fine will be issued. Points will stay on record for 24-months after which they will be wiped from the record. To find our more please follow this link – https://www.gov.uk/government/publications/penalties-for-late-submission/penalties-for-late-submission

If you have any questions in relation to Making Tax Digital our team would be happy to help. Please call us on 01173 700 079 or e-mail hello@steppingstonesaccountancy.co.uk.

Complete your tax return in June 150 150 Stepping Stones Accountancy

Complete your tax return in June

In our latest animated video we explain why you should completed your tax return in June.

HMRC Explore Options for Changing Tax Payments | HMRC Tax Advice | Modern Tax Administration | HMRC Tax Help Bristol
HMRC exploring options of changing tax payments 758 513 Stepping Stones Accountancy

HMRC exploring options of changing tax payments

The Government have recently announced a 10-year strategy to build a modern tax administration systems and as part of this they have begun a consultation period which lasts until 13 July 2021. This will involve a “call for evidence” approach which focuses on the benefits and challenges of the current tax payment system with a view to reducing the gap between when income/profits increase and income tax or corporation tax is paid. 

As with any new scheme there will be some issues to overcome. For example, how do you consider payments that are made under the income self-assessment heading or corporation tax for small companies, as these do not fall under the quarterly tax instalments?

How it currently stands

As it currently stands any self-employed taxpayer who has just started trading will have up to 22 months to pay their first tax bill. For an established trader, payment will typically be made twice a year and a balancing payment on any outstanding liability.

If we look at corporation tax there is also a delay between making profit and when a corporation payment is due. Payment is due in 1 instalment no later than 9 months after a company’s accounting period.

The need for change

The current situation brings with it a range of issues, having a large liability to pay at a specific time of the year can cause problems, especially when a tax bill comes out higher than what was expected. Changing this to a more regular payment based on the end of year reports could provide more accurate figures and greater control.

The issue

The HMRC are focussed on trying to improve how they receive funds, especially considering that 34% of their outstanding debts are for income tax and corporation tax.

What are the plans?

Consideration is being given to whether payments should be on either a monthly or a quarterly basis. As it stands HMRC are exploring all options.

Tax payments could be calculated in the year, developed as a result of up-to-date information and with projections on annual liability. Alternatively, tax payments could be based around the previous year’s tax liabilities. Finally, it could be based on estimations of the taxpayer’s liability for the operating year.

Of course, all ideas are on the table at the moment. The focus is to develop ideas that can be given careful consideration before a framework for moving forward can be finalised. HMRC also recognises that plans might need to be different for specific industries or taxpayer types.

If you have any questions or would like to discuss your tax liabilities please call us on 01173 700 079 or e-mail hello@steppingstonesaccountancy.co.uk.

Construction Industry Scheme (CIS) Refresher | Tax Advice for CIS | CIS Accountancy Help Bristol
Construction Industry Scheme (CIS) Refresher 758 513 Stepping Stones Accountancy

Construction Industry Scheme (CIS) Refresher

The Construction Industry Scheme (CIS) is a HMRC initiative where, if you work on a self-employed basis for a contractor in the construction industry (not as an employee), CIS rules state that the contractor needs to withhold tax payments from you at a rate of either 20% if you are registered or 30% if you are not. This is a slightly different set-up to other self-employed professionals who would receive gross payments with no tax is deducted.

It is not just typical construction work that the CIS covers, it can also include site clearing, repairs, demolition and decorating. The HMRC website has a very useful breakdown on what is included for the CIS – https://www.gov.uk/hmrc-internal-manuals/construction-industry-scheme-reform/cisr14000.

Anybody operating under the CIS needs to accept that, if construction services are delivered directly to a homeowner, then this work is outside of the scheme’s remit and customers will need a gross bill with no tax exclusions.

In essence you should register for CIS if:

  • You are acting as a contractor and using the services of self-employed professionals to complete construction work
  • You are acting as a self-employed professional offering construction services

If you have any questions in regards to CIS then our team would be delighted to help, please call us on 01173 700 079 or e-mail hello@steppingstonesaccountancy.co.uk.

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