What is Making Tax Digital (or MTD for short)
On 1 April 2019, three days after the UK is set to leave the EU, Making Tax Digital for VAT will come into force for all those business with an annual taxable turnover above the VAT registration threshold. Every business affected must have software that can transfer VAT data directly to and from HMRC’s systems – the page that you currently use to enter your VAT figures onto will cease to be available for you to use. Despite the 12-month ‘soft landing’ period, many businesses, especially those that continue to use spreadsheets for their VAT records, could be in for a shock.
What does this mean?
Making Tax Digital for VAT requires VAT registered businesses with taxable turnover above the VAT registration threshold to keep records in digital form and file their VAT Returns using software (if you are registered for VAT, but your taxable turnover is below the VAT registration threshold, or your taxable turnover has never exceeded the threashold then slightly different rules apply).
The first VAT period for which the rules apply is the period covered by the return starting on or after 1 April 2019.
Something to consider:
Is your current book-keeping system MTD compliant? Do you need to consider bridging software or even replacement or updated software? If this isn’t enough to worry about, another question to ponder is whether your preferred provider still produces software that runs on your computer? To explain; there is a gradual shift from away from programs which install on your computer towards cloud based systems.
VAT Notice 700/22: Making Tax Digital for VAT contains information on the provisions of the Value Added Tax (Amendment) Regulations 2018 (SI 2018, No.261)
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