Making Tax Digital
What Is Making Tax Digital?
The Government has introduced a program of "Making Tax Digital" (also known as MTD) which is designed to simplify the process of providing information to HMRC through the increased use of digital data. By requiring taxpayers to keep digital records and submit information using software rather than relying on paper forms, HMRC hopes to reduce the chance of errors and make it easier for taxpayers to comply with their reporting obligations in the long term.
Making Tax Digital Timetable
The first stage of MTD relates to VAT registered businesses and individuals and comes into force from 1 April 2019. Where a business or individual has a taxable turnover in excess of the VAT registration threshold of £85,000, they will be required to keep digital VAT records for periods starting after 1 April 2019 and must submit VAT returns using software rather than the current HMRC VAT online filing system. Many businesses already comply with these rules, but for others this will represent a significant change from the current process of keeping a written cash book and paper invoices and receipts. For businesses with turnovers below £85,000 compliance with MTD will be optional, but if a business is initially within MTD they will not be allowed to leave the scheme even if their turnover falls unless they deregister for VAT.
Making Tax Digital Delayed
There is currently a pilot scheme for MTD for income tax, but this has been delayed by HMRC until at least April 2020 and it is currently uncertain when it will become mandatory.
Our MTD Services and Support
MTD presents both challenges and opportunities to taxpayers, especially those who currently maintain paper records or submit paper tax returns. We are here to assist our clients through all of the changes and highlight where the new requirements can be turned into an advantage, such as by keeping business information in a format which can be used to monitor and improve trading performance and profitability. We recognise that every client is different and we can offer tailored advice on the most suitable software for your individual circumstances.
Making Tax Digital Exemptions
There are also a number of exemptions from MTD for VAT designed to reduce the impact of the changes on businesses and individuals for whom the new requirements are particularly onerous. We can advise you whether an exemption is likely to apply and assist with applications to HMRC.
Get In Touch
If you are confused by Making Tax Digital or would like advice and support in getting ready for MTD, we can help.