By 2020 most businesses, self-employed individuals and landlords will be required to use software or apps to keep their business records and to report their income and expenditure on a quarterly basis to HM Revenue & Customs. This new regime will commence on 6 April 2018 for most small businesses. Self-Assessment tax returns will no longer be completed from 2018/19 onwards.
What records will I need to keep?
HMRC will expect businesses to scan paper invoices and receipts into software using a smartphone camera. For many businesses it is expected that the scanned evidence of income and expenditure will be automatically processed by the software into the relevant accounting entries. HMRC prefers that the following data fields are completed for each receipt or expense item:
- Invoice date and payment received date, if cash basis being used
- Invoice value and payment received value, if cash basis being used
- Income or expenses category, and
- Deducted amount/percentage for expenses.
The above is the minimum required data which will be needed to enable software to identify and categorise each transaction.
Landlords will need to provide the following:
- The full address of each property
- Income and expenses attributable to each property.
The data of income and expenditure will have to be reported quarterly, although the reports will only be summary data. Businesses will be able to see an estimate each quarter of what their liability will be, based on the summary data provided.
End of year return
A final fifth submission will be made which will incorporate a correct and complete declaration. It is proposed that this final account will have to be submitted within 9 months of the end of a period of account.
The above is subject to a period of consultation due to end in November and final details are due to be announced in December. Green & Co will keep you informed as further details/changes are announced.
Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.