HMRC is phasing in its landmark Making Tax Digital (MTD) initiative, which will see a fundamental change to the way in which businesses keep records and report to HMRC, and will ultimately require businesses and individuals to register, file, pay and update their information via a secure online tax account.
The new system was originally intended to be implemented between 2018 and 2020. However, following concerns raised by business and industry experts, the government has put forward a revised timescale for its introduction.
Under the new timetable, with effect from 1 April 2019 businesses with a turnover above the VAT threshold (currently £85,000) must keep digital records for VAT purposes and provide their VAT return information to HMRC using MTD functional compatible software.
Keeping digital records and making quarterly updates will not be mandatory for taxes other than VAT before April 2020, although businesses below the VAT threshold which have voluntarily registered for VAT can opt to join the scheme.
MTD will ultimately affect all businesses, regardless of their size. As your advisers, we are carefully monitoring the latest developments and we can help you to prepare for the new system.