Making Tax Digital for Corporation Tax consultation
In the next step along the ‘Making Tax Digital’ path, HMRC are considering what Making Tax Digital for Corporation Tax should look like in their consultation document published in November 2020
This is an area of particular interest to LITRG due to the increasing number of people trading through a company but who frequently do not understand what this entails. They often fail to appreciate the separate legal status of the company and struggle to differentiate between the company and their own personal affairs. There is also often confusion between the different roles and requirements of Companies House and HMRC.
This general lack of understanding of how a company operates can have serious consequences as both corporate and personal compliance then fall behind and penalties are likely to be incurred. This can all have a significant impact on the owners/directors, as it is often a stressful experience.
We have responded to the recent consultation document and questionnaire for small businesses to provide insight to HMRC on the small company perspective. In this context the small company will often be a sole director/shareholder company or a family company with a small number of family members as shareholders and/or directors. The issues for these companies are of course very different to those that might arise for large companies, multi nationals, and corporate group.
We have called for:
- an exemption from MTD for corporation tax for the smallest companies;
- extensive support and guidance for those who are less digitally capable;
- free software to be available for those with the lowest profits in the scope of MTD for corporation tax
- bridging software to be available for those who use spreadsheets as their digital record keeping tool
- the free Company Accounts and Tax Online (CATO) service to be retained
The full response can be found here.
The consultation and online questionnaire for small businesses can be found here.