Smallest businesses exempt from quarterly reporting
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HMRC has confirmed it is no longer planning to have the smallest businesses report back quarterly on their tax affairs.
HM Revenue & Customs (HMRC) announced 1.3m unincorporated businesses and landlords with turnover less than £10,000 would be able to use the digital services it's currently rolling out without having to either keep their records digitally or check in with the taxman once every three months.
The decision to not require 1.3m businesses to report quarterly, which HMRC said came after months of discussion with business and agent groups, may be extended to further groups of businesses while it was also looking into the best ways to help businesses with the transition to digital.
"We are committed to a transparent and accessible tax system fit for the digital age, and Making Tax Digital is at the heart of these plans," said financial secretary to the Treasury, Jane Ellison. "This new system will make the UK's tax administration more efficient and straightforward, and will offer businesses greater clarity when it comes to paying their tax bills."
Andrew Tyrie, chairman of the Treasury Select Committee, said "Exempting those small firms and the self-employed whose primary income from a business is below £10,000 is welcome. It's also common sense. They should have been given this exemption in the first place."
However, those business who are not exempt from quarterly reporting will now need to be even more vigilant when it comes to submitting their reports.
Those that are late in supplying information about their tax affairs will face a new "penalty point system", similar to that used for motorists.
Four offences will result in an automatic fine, which could be as much as £100. Every additional point will result in a further fine.
Under the plans the points will only be "reset to zero" after two years in which all information has been submitted on time.
The scheme will see those who repeatedly fail to file their tax returns on time face hundreds of pounds worth of fines.
At present those who miss their annual deadline face a single automatic penalty of £100.