MAKING TAX DIGITAL – VAT
Making Tax Digital (MTD) for VAT was launched in April 2019.
All VAT registered businesses above the VAT threshold (£85,000) are now recording and reporting their VAT affairs digitally to HM Revenue & Customs (HMRC) using approved MTD functional compatible software. Businesses with more complex VAT affairs have an extension until October 2019 in which to comply. However, VAT registered businesses are currently benefitting from an HMRC soft approach that gives businesses up to a year to get their MTD in place for VAT. During that period businesses will not face HMRC penalties for late MTD submission.
From April 2022 all VAT-registered businesses regardless of turnover will also be required to record and report their VAT affairs digitally.
MTD FOR OTHER TAXES
MTD for Income tax will follow on from MTD for VAT. There is no set date for the introduction but following the 2019 Spring Statement, the government released a ministerial statement stating that MTD for other forms of tax would be delayed until April 2021 at the earliest.
It is expected that MTD for Corporation Tax will be introduced alongside or shortly after Income Tax reporting for MTD in 2021. However, we have still not seen formal confirmation of the release date from HMRC.
GETTING READY FOR MDT OTHER TAXES
MTD for both income tax and corporation tax is a long way off but we recommend that businesses review their systems and processes now to ensure they are ready for the change. Additionally, VAT registered businesses below the VAT threshold will also be expected to report their affairs digitally in the near future. It will impact many sole traders, landlords etc…. so it is important that all businesses regardless of size are ready for the change.
HMRC are currently in the process of testing and releasing information on MTD software for other taxes and what software is currently available and compliant. Virtually all accounting software will be compliant as software providers will need to comply.
Contact for more information or help
Roger GUNNING FCMA CGMA
Tel: 01452 687742