Making Tax Digital
Making Tax Digital (MTD) is the Government initiative to deliver a fully digitised tax service. The latest announcement from HM Treasury has confirmed our suspicions that there will be a delay in implementation of this initiative as well as a reduced scope. This is a result of feedback and concerns from parliamentary bodies, businesses and the accounting profession.
The following changes to the initiative are:
- Only VAT registered businesses with a turnover above the VAT threshold will have to keep digital records from 2019, and only for VAT purposes. VAT information will need to submitted through MTD-compatible software. Businesses will not be asked to keep digital records or update HMRC quarterly for other taxes until at least 2020, instead of 2018 as originally proposed.
- There is no current timetable for bringing businesses with turnover below the VAT threshold into the MTD regime.
How will it work?
HMRC have confirmed that they will not be developing their own software. They are working closely with a number of providers in the consultation period to ensure that the software providers have enough information to update their software to incorporate the changes needed, so that users will be able to submit all necessary data.
What do you need to do?
While the delay gives us more time, we still strongly recommend the use of compatible accounting software for record keeping to keep up with the changing reporting requirements.. Online packages are likely to offer the most streamlined solution, but there will be solutions for all types of businesses. Now would be a good time to consider your options if you haven’t already done so. If you require assistance in this area, we will be happy to provide you with information regarding the options available.