In the Dark about Making Tax Digital
With less than 6 weeks to go until most VAT registered businesses are required to comply with MTD, there is still concern that not enough progress has been made on making business owners aware of the new rules.
Only 1 in 200 eligible businesses have already signed up to MTD, and HMRC has published research indicating that as at December 2018, 1 in 5 businesses required to join hadn’t even heard of it.
Adrian Rudd, Chair of the joint CIOT/ATT Digitalisation and Agent Strategy Working Group has said “We note that by far the most common way those who are aware of MTD have been made aware is by their tax adviser or accountant. We and our members will continue to do what we can to raise awareness over the months ahead but it is likely that many of those who remain unaware will be businesses who do not get external tax advice and will therefore be harder to reach.”
In order to improve awareness, HMRC has stated that it will ensure that letters are sent to every business by the end of this month to inform them of how to prepare and where to find the relevant information.
If you are unsure how MTD will affect you and your business, please contact a member of the team.
What is Making Tax Digital (“MTD”)?
Under the new MTD rules, from 1 April 2019 most VAT-registered businesses will be required to keep digital financial records and submit VAT returns using HMRC-compatible software.
This is deferred to 1 October 2019 for trusts, not-for-profit organisations not set up as companies, VAT divisions and VAT groups, traders based overseas, those required to make payments on account, and annual accounting scheme users.
In brief, there are three new requirements for businesses to be MTD compliant:
- Records must be kept digitally;
- VAT returns must be filed via API-enabled software; and
- VAT return data must be imported/exported between programs digitally. Please note that in the first year a “soft landing” will apply, therefore this requirement will not come into force until April 2020.
Making Tax Digital: The Lowdown (Intelligent Tax, Issue 13 December 2018)
Computer Love? Making Tax Digital – An Update (Intelligent Tax, Issue 11 May 2018)
Making Tax Digital: Bringing business tax into the digital age (9 September 2016)