MAKING TAX DIGITAL (MTD)
In August 2016, HMRC issued six consultation documents on making tax digital (MTD). The consultation period ended 6 November 2016. On 13 July 2017, the Government announced MTD will commence in April 2019 for VAT purposes for businesses with turnover above the VAT threshold (currently £85,000) and will be delayed until at least 2020 for all other businesses.
Under MTD for VAT, the information required to be held in the VAT account must be kept digitally (the regulations refer to this as your “electronic account”), and the information in that electronic account will be used by functional compatible software to calculate and fill in your VAT return.
Are you using functional compatible software? You may be required to change you software systems, processes and procedures.
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- Select best solution
- Initial configuration
- Chart of accounts
- Bank feeds
- Invite users
- Transaction history
- Email settings
- Business templates
- Report customisation
Essential£397* one off
Full£149* payments x6
- 24 months
- 1 month
Premium£119* payments x12
- 48 months
- 3 months
*All prices shown are exclusive of VAT
In summary, you will be required to:
- Prepare and submit VAT returns from April 2019 using Making Tax Digital compatible software;
- Keep integrated digital records;
- Digital records will need to be preserved for up to 6 years;
- Prepare and submit Corporation Tax returns from April 2020 at the earliest using Making Tax Digital compatible software;
- Self-employed and landlords with income in excess of £10,000 will need to prepare and submit returns from April 2020;
- Review existing record keeping processes and software; and
- Budget for expenditure as there will be one-off and ongoing costs.
Below are some useful links to help get you started.
Disclaimer This overview should not be relied upon as comprehensive guidance but as a reminder of some of the key points of MTD and users should refer to HMRC for more detailed guidance. Please see https://www.gov.uk/government/publications/making-tax-digital/overview-of-making-tax-digital. If you require further help with your planning please contact us.
HMRC’s Four Foundations of Making Tax Digital
*based on each setup saving 7 hours per week