Making Tax Digital
Without a doubt, HMRC’s drive to digitalise tax makes sense. Why request an annual return of taxable income when all the data can be pushed to a centralised Account (PTA) in real time?
MTD is mandatory for all VAT registered businesses, from April 2019. i.e. businesses with turnover of more than £85,000. As of April 2019, businesses affected by MTD filing for VAT purposes will need to upload their VAT returns directly from authorised accounts software. Most suppliers of software now have links to HMRC’s digital accounts system. This is a major change, probably the most impactful, since selfassessment was introduced over twenty years ago.
Once MTD is fully implemented – no earlier than April 2020 – business and rental profits are to be uploaded on a quarterly basis directly from authorised accounting software used by the business owners or their advisors.
Summary Action List
- If you are VAT registered, and your turnover is more than £85,000, from April 2019 you will be required to file VAT returns using the new MTD platforms. If affected, make sure you are using compatible software.
- Ensure that you can manage the reporting process effectively, and without increasing your tax or NIC liabilities beyond the amount that you are required by law to pay.
- Landlords with significant rental income will likely be drawn into the MTD filing regime when it is rolled out to unincorporated businesses, possibly from April 2020. This will require landlords to use compatible accounts software from this date.
- Keep an eye on our updates on this topic. We are being drawn into a digital net for tax purposes and there does seem to be some inevitability about the process.
- If you are completely mystified by MTD, please call to discuss how we can help you get ready for the inevitable and deal with the ongoing filing requirements.
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