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No change on Basis Period as yet

Although regulations for MTD ITSA have been laid. Changes for Basis Period have not.

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I thought it would be useful to bring this from the developers call with HMRC.

If Basis Period is changed (and that is not confirmed either way) it will not happen before MTD ITSA.  That's what developers have been told

 

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By Paul D Utherone
23rd Sep 2021 17:11

Apparently it has been deferred a year. Lucy Frazer seemingly also said:

"The Government has also recently consulted on a reform of the complex basis period rules that govern how self-employed profits are allocated to tax years. Many respondents said that the reform was a sensible simplification but asked for more time to implement the changes. In recognition of these concerns, these changes will not come into effect before April 2024, with a transition year not coming into effect earlier than 2023. The Government will respond to the consultation in due course providing the next steps."

It's the final paragraph here - https://questions-statements.parliament.uk/written-statements/detail/202...

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By Paul D Utherone
23rd Sep 2021 17:35

The line "Many respondents said that the reform was a sensible simplification ..." in so many HMRC pronouncements always causes me to give an involuntary hollow laugh and think of the response in my favourite case report (Pressdram v Arkell of course should you be wondering)

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By johnhemming
24th Sep 2021 07:02

The decision as to whether to do it has also been deferred. I am myself not persuaded that making this change is a good idea.

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RLI
By lionofludesch
24th Sep 2021 07:41

johnhemming wrote:

The decision as to whether to do it has also been deferred. I am myself not persuaded that making this change is a good idea.

I would agree that it probably isn't. Though many would have been attracted by the opportunity to spread the excess profits over five years.

Having said that, we get an astonishing number of overlap queries on here, bearing in mind that the legislation is 25 years old and remains essentially unaltered since its introduction.

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By NotAnAccountant2
24th Sep 2021 08:08

johnhemming wrote:

The decision as to whether to do it has also been deferred. I am myself not persuaded that making this change is a good idea.

I can't tell whether the MTD mandated quarterly dates and EOPS effectively forces the change to be done before businesses can be dragged into MTD.

(If the quarters are purely done on cash basis for everybody and divorced from the EoY accounts other than having to use the same "digital records" then I can see how it can work with different year ends. But unless I completely misunderstand, that makes any estimate of tax due from the quarterly figures meaningless in many cases)

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By johnhemming
24th Sep 2021 09:40

Actually I think you are right and the SI has been drafted on the assumption that the basis period change is agreed.

I don't think they meant to do that.

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