MTD start dates: HMRC published draft secondary legislation in September 2017. The proposed start date is not confirmed but is given as 6 April [YYYY]. If we assume that [YYYY] = 2020, some businesses seem to start in 2019.
If we assume that [YYYY] = 2020 the rules will work as follows:
- For an entity that prepares accounts, without a property business,
- Existing business: The first accounting period starting after 5 April 2019
- New Business: Either
- If the account end date is after 5 April following commencement, the first day of the new accounting period
- Otherwise 6 April following commencement
- For any other entity
- Existing: 6 April 2020
- New Business: 6 April following commencement
Examples:
Existing business, 31 March year end
- 31 March 2020 is after 5 April 2019, so the MTD rules would apply from 1 April 2020
Existing property business
- Deemed 5 April year end, so MTD applies from 6 April 2020
Existing business, 30 April year end
- 30 April 2019 is after 5 April 2019, so the MTD rules apply from 1 May 2019.
New company 1 February 2021
- If its first set of accounts are to 31 March 2021, the MTD regulations would apply from 6 April 2022
- If its first set of accounts are to 31 January 2022, the MTD regulations would apply from 1 February 2022
- If its first set of accounts are to 31 July 2022, the MTD regulations would apply from 1 August 2022
Proposed Draft Secondary legislation
The proposed clause 4: we cannot see that this make sense and we particularly don’t understand paras 4) and 8)
For para 4 we read as:
Existing business, change of accounting date, 30 April year end and 31 December year end in 2020
- First account end date is 30 April 2020, which is after 5 April 2020, so the MTD rules apply from 1 May 2020 and not from 1 January 2021; this seems redundant.
Nothing, for example, clarifies the position if there are two accounting periods ending in 2019/20; presumably this would apply from the first day of the second period (simply under the terms of 3(c))
This also means that MTD applies before 5 April 2020, its official start date.
Should 3(c) read [YYYY] rather than [YYYY-1]?
Should 4 read [YYYY-1] not [YYYY] and [YYYY] not [YYYY+1]? If so, surely MTD should apply from the date closer to 5 April 2020.
Proposed draft secondary legislation: Digital start date (Clause 4)
(1) The digital start date which applies to a business is the date set out in this regulation.
(2) Paragraphs (3) to (5) apply where a relevant entity is carrying on a business immediately before 6th April [YYYY].
(3) Where—
(a) the business is not, or does not include, a property business;
(b) the relevant entity draws up accounts in respect of the business; and
(c) the period of account ends on a date (“the account end date”) which is on or after 5th April [YYYY-1],
the digital start date which applies to the business is the date after the account end date.
(4) Where the relevant entity has in respect of the business more than one account end date which is on or after 5th April [YYYY] and before 6th April [YYYY+1], paragraph (3)(c) applies to the first account end date.
(5) In any other case, the digital start date which applies to the business is 6th April [YYYY].
(6) Paragraphs (7) to (9) apply where a relevant entity commences carrying on a business on a date (“the business start date”) which is on or after 6th April [YYYY].
(7) Where— (a) the business is not, or does not include, a property business; (b) the relevant entity draws up accounts in respect of the business; and (c) the account end date is on or after 5th April immediately following the business start date, the digital start date which applies to the business is the date after the account end date.
(8) Where the relevant entity has in respect of the business more than one account end date which is— (a) on or after 5th April immediately following the business start date; and (b) before 6th April of the next year, paragraph (7)(c) applies to the first account end date.
(9) In any other case, the digital start date which applies to the business is 6th April immediately following the business start date.
