It’s time to Make Tax Digital
Next spring sees the introduction by HM Revenue and Customs of Making Tax Digital (MTD). After over four years in the planning, does it affect you and what do you need to do to make sure you and your business is ready?
Morrell Middleton, Chartered Certified Accountants based on Clifton Moor explain more...
WHAT’S IT ALL ABOUT?
The aim is for HMRC to be interacting digitally with all taxpayers, which in effect means moving to mandatory online filing and records needing to be kept electronically.
WHEN DOES IT START AND HOW WOULD MTD WORK?
MTD had been planned to start in April 2018. It will now start in April 2019 and only at that date for businesses with a turnover above the VAT threshold in order to meet their VAT obligations. The deadlines for sending VAT returns and making payments are not changing.
From April 2019, businesses above the £85,000 threshold have to provide their VAT information to HMRC through Making Tax Digital software. This software will not be provided for free by HMRC. The software will be offered by third parties and HMRC has no plans to endorse a particular provider.
Businesses will send summary data to HMRC about their business each quarter, or more often if the business prefers. They will also send a detailed breakdown of sales/income as part of the return.The summary data will consist of total income and total expenditure. Making Tax Digital for taxes other than VAT will begin ‘not before’ April 2020.
SO WHAT NEXT?
HMRC are currently running a pilot and are seeking volunteer VAT registered businesses to take part. HMRC are working with software providers in order to test their systems. Later this year a more public VAT pilot will be launched, though no specifics have been released.
In August 2018 HMRC announced that they are working with more than 150 software suppliers who will provide software in time for April 2019 to meet the VAT requirements. Currently, 40 software providers are able to support the pilot scheme.
Earlier this year, HMRC began inviting self-employed individuals and agents to join the Making Tax Digital (MTD) pilot for income tax. The aim being that taxpayers will see an estimate of how much tax they owe rather than waiting until the normal due dates.
For assistance in ensuring you’re MTD compliant speak with your current accountant. If they can’t provide you with the answers you want, or you’d like independent advice contact our team at Morrell Middleton on 01904 691141 or at email@example.com
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