HMRC has confirmed that the current raft of consultations do not cover incorporated businesses, except for those very small incorporated entities which are exempted from the quarterly reporting requirements under the new proposals. HMRC is also reviewing whether charities will have to comply with the quarterly reporting requirements.

All unincorporated businesses and landlords with annual incomes below £10,000 will be entirely exempted from the quarterly reporting obligations.

Due to the complexity of the requirements for Making Tax Digital for larger businesses, HMRC is still reviewing the proposals and practical issues for this group, following concerns from the leading tax institutes and professional bodies about how the system would work in practice.

The HMRC consultation document, Making Tax Digital: Bringing business tax into the digital age, states: ‘…this consultation focuses primarily on unincorporated businesses as they will make the transition to Making Tax Digital first. It also covers areas relevant to incorporated businesses of all sizes where it is appropriate to do so (eg, exemptions).

‘It is anticipated that a further discussion document, focusing on the incorporated sector and on the most complex businesses, will be published at a later date.'

Essential reading

Find out more about the series of Making Tax Digital consultations: what you need to know here