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Making Tax Digital (MTD) is a HMRC initiative designed to make sure the UK tax system is effective, efficient and easier for taxpayers through the implementation of a fully digitalised tax system by 2020.
Businesses within scope will need to acquire a suitable commercial software product or appoint an agent to submit returns to HMRC on their behalf. HMRC is working with software suppliers who have tested their products in HMRC’s test environment and already demonstrated a prototype of their software to HMRC. There is currently a list of 45 approved software providers and HMRC will continue to update this list as testing progresses.
HMRC’s online VAT return will remain available only to businesses that are voluntarily registered for VAT (i.e. businesses that complete a VAT return but have taxable turnover below the VAT threshold).
Other components of MTD, such as income tax and corporation tax, have been placed on hold until April 2020 at the earliest.
How can we help?
Depending on your existing accounting systems and processes, the switch to MTD for VAT may be relatively straightforward, using an appropriate software provider. On the other hand, you may see this as a chance to update the processes involved in the production and submission of your VAT returns.
If you are currently maintaining manual records and/or submitting VAT returns via HMRC online account, this is definitely going to affect you. We can help put plans in place to ensure you are compliant before MTD goes live as well as recommend the software which will best suit you and your business needs.
If you have any other questions relating to MTD, please do not hesitate to contact us. We recently held a webinar on the subject, the recording for which can be found here.