Part of the government’s plan is ‘Making Tax Digital’, and by introducing this, it is set to make it easier and more simplistic for businesses to run properly. It will help them keep on top of their finances, and ensure they get their tax right the first time.
HMRC has a huge ambition to become one of the most digitally advanced tax administrators in the world. Underlying changes are being made through Making Tax Digital as the tax system will be working differently by transforming tax administration. It will help by making;
- It easier to file correct tax returns
- It more effective
- It more efficient
Making Tax Digital for VAT Registered Businesses
VAT-registered businesses with a taxable turnover will be required to use the Making Tax Digital service to digitally keep records and submit their VAT returns by using appropriate software from 1st April 2019.
There will be a small minority of exceptions for VAT-registered businesses who have more complicated requirements. HMRC engaged with business owners and listen to any concerns they may have about their businesses being ready for Making Tax Digital. The decision has been made to delay mandation for them customers until 1st October 2019.
Top MTD Facts
Some agents and businesses are providing updates and keeping digital records to HMRC as part of a ‘live pilot’ to develop the Making Tax Digital service for Income Tax. If you are either a landlord or a self-employed business, you are not required to use this service as yet, however, you can keep your business records digitally and send Income Tax updates to HMRC by voluntarily using software instead of filing a Self-Assessment tax return.
Most customers want to get their tax right but the latest tax gap figures reveal that too many are finding this hard. Digital records have improved the accuracy, and along with the support built into a lot of software products and the fact that information is forwarded directly to HMRC from the digital records; the amount of tax lost to these avoidable errors will be dramatically reduced.
One of the biggest concerns highlights to HMRC about MTD was about the pace in which this is implemented. In July 2017, the government announced that the pace of mandation would be slowed down and that Making Tax Digital will not be compulsory for taxes other than VAT, until at least April 2020.
In March 2019, the government then announced that they would focus on helping businesses to transform, and therefore will not be Making Tax Digital for any new businesses or taxes in 2020. The roll out date is yet to be confirmed.
It’s can be a worrying time but as a Bookkeeper, I feel, these changes are going to make it much easier for businesses to manage their information and finances.
If you would like to chat about how these changes could affect you, feel free to get in touch, contact your local Rosemary Bookkeeper today.