“Quarterly reporting” is another key concept under Making Tax Digital. In this article we’ll examine what it means for you and your clients, laying the groundwork for a more in-depth look next week at what needs to be included in the quarterly reports to HMRC.
What is “quarterly reporting”?
Quarterly reporting is another key element of Making Tax Digital. It fundamentally changes the current process of submitting information to HMRC once a year, making it a task that will have to be performed five times per year (including the end of period submission).
As I explained in an earlier blog article, data will need to be recorded digitally, with a submission made to HRMC each quarter from which the taxpayer’s digital tax account will be updated. A significant advantage to the taxpayer is that this will give them as close to a real-time view of their tax position as possible.
Roles and responsibilities
The transition to quarterly reporting will inevitably mean changes to the work that you and your clients need to undertake. As part of your preparation for MTD, you need to engage with your clients to decide who will be responsible for quarterly reporting, what new processes you may both need to perform and which tools you’ll be using to support you.
- If you are responsible for quarterly reporting: Consider how many clients you’ll be responsible for, how many different bookkeeping packages you will have to work with and how you are going to manage this work.
- If your client is responsible for quarterly reporting (but you will be looking after the end of period submission and producing the accounts). Consider the processes involved in reviewing, validating and potentially adjusting each quarterly submission.
The end of period submission
Individuals and businesses will need to send an end of period submission for the business and property income, taking into account the quarterly updates and making any necessary adjustments. This is often referred to as the ‘fifth quarter’.
Because of the separate need for an end of period submission for business income and an end of year submission for other income, the current process for an individual’s tax return will change (as discussed in our earlier blog article on client complexity under MTD).
The end of period submission not only needs to take account of all the business data from the quarterly reporting, you will also need to (digitally) collect any other income, from multiple sources (such as banks), and make sure your client validates the information.
As part of your preparation for MTD you should start thinking now about the digital tools that could support you, your practice and your clients with these tasks.
In next week’s blog article I’ll be looking in more detail at the quarterly submissions and what you’ll be expected to send to HMRC. Why not subscribe to receive news of all new blog articles?