Making Tax Digital is just around the corner – is your accounts system ready?

Making Tax Digital (MTD) is an HMRC initiative designed to make sure the UK tax system is effective, efficient and easier for taxpayers. The roll out starts on 1 April 2019 with MTD for VAT. From that date, VAT-registered businesses above the threshold of £85,000 turnover will have to keep digital records and submit VAT returns using compatible software. The following Q&As should help you in what to do next.

Q: – Is my current software compatible?
A: – If you have a Cloud-based accounts package, you probably are or will be ready. We would advise you ask the question now. If you have a non-Cloud package you may well not be ready, depending on the version you are running.

Q: – I use excel or paper to prepare my VAT returns and key them into HMRC website, what do I need to do?
A: – From the 1st April you will no longer be able to key figure directly into HMRC website.
HMRC will accept some types of spreadsheet but they need to be linked and submitted via compliant software. We would recommend talking to us about moving your accounts system NOW to an online system so as you are ready for the deadline.

Q: – My software is compatible, but I key my VAT return details into HMRC website, can I continue this?
A: – No, however you should be able to set your accounts system up to submit the returns for you.

Q: – Do you have a list of accounts packages that are ready?
A: – The list is changing all the time as companies complete testing.

The major products that have confirmed are compliant or will be are:

• Sage 50c Version 24 above (note the c versions of Sage)
• Sage 200cloud spring 2018
• Sage 200c 2011 to winter 2017 (you will need an additional module to make you compliant)
• Xero
• QuickBooks – Online versions
• Sage Accounting (formerly Sage One)

HMRC has a full up to date list here

HMRC plan to roll out its next phase after April 2020, while this like target the self-employed and landlords.

If you would like any assistance with your software, please contact us on the details below:

Keith Knight – Head of Client IT Support
Wilson Henry LLP
145 Edge Lane, Liverpool, L7 2PF
T +44(0)151 264 8888
E Keith.Knight@wilsonhenry.co.uk

Property landlords, if you have an HMO… here’s what you must do

HMOs

In simple terms, a house or flat is a HMO (House of Multiple Occupancy) if it is occupied by three or more tenants who form two or more households and the tenants share some or all of the toilet, bathroom or kitchen facilities. The requirement that the property have three or more storeys no longer applies after 1 October 2018.

A landlord of such a property must comply with the Management Regulations relating to HMOs. These are discussed below.

Licensing of large HMOs

A landlord of a large HMO must obtain a licence from the local housing authority to operate the HMO. More information about licensing can be found at www.gov.uk or on the relevant local authority website.

Local housing authorities have the power to designate the whole or part of their district as subject to additional licensing of HMOs. This means that a licence is required for the types of HMO specified in the designation, not just those fitting the description of a large HMO. Additional licensing may be introduced to address problems caused by ineffective management of HMOs in the area.

Landlords should check with the local housing authority whether their HMO is affected by additional licensing. An application form will need to be completed and a fee paid. Usually an inspection will be carried out. Landlords should contact the local housing authority for further details and refer to the guidance at www.gov.uk.

Planning law and HMOs

Landlords of private rented housing, including HMOs, need to be aware of planning rules and make sure they comply with them.

A dwelling house in the occupation of a single household falls into Use Class C3 under the Town and Country Planning (Use Classes) Order 1987 (as amended).

Use Class C4 covers use of a dwelling house by 3-6 residents as an HMO.

No planning permission is required for a change from C3 use to C4 use or vice versa.

NB: HMOs where more than 6 people live are not in any Use Class which means that planning permission is required for such use.

Management of HMOs

Landlords of HMOs, whether licensed or unlicensed, must comply with The Management of Houses in Multiple Occupation (England) Regulations 2006. The Regulations can be viewed at www.legislation.gov.uk.

The Regulations cover the following matters.
• The “manager” is the person managing the HMO. This may be the landlord or another person such as an agent.

• Regulation 3 requires the manager to ensure that his/her name, address and any telephone contact number are made available to each household in the HMO and that these details are clearly displayed in a prominent position in the HMO.

• Regulation 4 requires the manager to take certain safety measures, including those relating to fire safety.

• Regulation 5 requires the manager to maintain the water supply and drainage system in good, clean and working condition.

• Regulation 6 relates to gas and electricity supplies. The manager must not unreasonably cause the gas or electricity supply to the HMO to be interrupted. The manager must also supply the local housing authority with gas appliance test certificates and electrical test certificates within 7 days of receiving a request from the authority.

• Regulation 7 contains the manager’s duty to maintain common parts, fixtures, fittings and appliances.

• Regulation 8 deals with the manager’s duty to maintain each unit of living accommodation in good and clean condition.

• Regulation 9 relates to the provision of waste facilities.

• Regulation 10 sets out the duties of occupiers of HMOs. It is useful to bring these duties to the attention of occupiers.

Minimum room sizes

With effect from 1 October 2018 licences granted for HMOs must include conditions requiring the licence holder to ensure that rooms used as sleeping accommodation have a specified minimum floor area. The required floor area varies according to the number and age of the occupiers as follows:

• sleeping accommodation for one person aged over 10 years: not less than 6.51 square metres
• sleeping accommodation for two persons aged over 10 years: not less than 10.22 square metres
• sleeping accommodation for one person aged under 10 years: not less than 4.64 square metres.

Failure to comply with these conditions is an offence attracting an unlimited fine. Local authorities also have the option of issuing a civil penalty notice of up to £30,000 as an alternative to prosecution.

Household waste

For HMOs in England, a licence granted on or after 1 October 2018 must include conditions requiring the licence holder to comply with any scheme provided by the local housing authority relating to the storage and disposal of household waste at the HMO pending collection. As with other HMO conditions, landlords can be prosecuted for breaches.