Farming needs to be ready for digital tax revolution

Already, we have seen the introduction of changes for both business and personal tax and we suspect things will only continue to develop.

Making Tax Digital is a key part of the government’s plans to make it easier for individuals and businesses to get their tax right and keep on top of their affairs, but for many in the rural and farm sector more frequent reporting could require strong updates to their internal processes.

The government had originally instructed that businesses were to keep digital records and update HMRC quarterly for income tax purposes from 2018. However, the Making Tax Digital for Business initiative has undergone considerable revision over the summer of 2017, resulting in delays to the timetable. The new proposal has particular consequences for VAT registered businesses, with compliance compulsory ready for April 2019.

Whatever the small print, MTD will involve fundamental changes in the way the rural and farm sector report their records to HMRC, and it is prudent that you review the way in which your business works, to ensure a smooth transition to a digital future.

Although the timetable seems far away, our advice is to look at the way you are reporting to HMRC now and consider if there may be a more effective way. Please get in touch if you would like support with the staged introduction of MTD and how you will digitally submit your accounts going forward.

Alongside the MTD plans, HMRC has now given every individual access to their own ‘Personal Tax Account’ and these are being regularly expanded and improved. Personal Tax Accounts are designed for taxpayers to interact securely with HMRC, update details, and check tax affairs in real time.

All taxpayers can now create and access their own digital tax account and we recommend that you create one. We have developed an information sheet which sets out the steps you need to take to open your own account, which can be found on our website: www.whittinghamriddell.co.uk/how-set-your-personal-tax-account

Further changes can be seen this month, with banks and building societies now required to report information to HMRC earlier and more frequently than currently. This information will then feed into the Personal Tax Accounts and will be used by HMRC to estimate tax liabilities in the form of ‘dynamic coding’. Dynamic coding aims to reflect changes in the work and income through real-time changes in tax codes, so the right amount of tax is collected up front.

Dave Morris is from Whittingham Riddell’s agricultural team