Most practitioners will remember clients who deposited their so-called books in once a year; dutifully bundled into a plastic bag.

Many have since adopted a digital approach and practitioners who promote one of the major cloud-based bookkeeping solutions, Xero etc, will have reaped the benefits.

One sector where this cloud bookkeeping process has been slower to adapt is buy-to-let landlords. 

Historically, renting property was considered an investment activity and in some respects it still is. However, HMRC describe buy-to-let taxpayers as running a property business.

A reluctance on the part of property owners to fully embrace the idea that you can use cloud-based software to record, monitor and report income for tax in this way received a rather abrupt endorsement from HMRC last week when the long-awaited implementation date for MTD purposes was announced.

Landlords will have until April 2023 to record their letting business transactions in an electronic format that is compatible with HMRC’s MTD systems. No mean feat if clients present records that consist of a lettings’ diary and a bunch of receipts.

For practitioners, this presents a range of opportunities to support clients in meeting these new demands during the next two years, but also designing and promoting the non-tax advantages that MTD, cloud-based bookkeeping could facilitate. For example, preparing quarterly accounts to discuss with clients before submitting quarterly returns to HMRC.

What is clear, is that plastic bag days for landlords are numbered. 

Source: New feed