The Business Bulletin
Making Tax Digital – unraveled! Initially launched in April 2019 for VAT registered businesses with sales exceeding £85,000 but the government has recently announced the next phases of Making Tax Digital which will affect more and more individuals and businesses.
If you are not yet filing your VAT
their tax right and keep on top of
returns under Making Tax Digital or
their affairs”. This initiative will be
are self-employed or a landlord then
rolled out over a number of years
you may be affected over the next
and will eventually see every part of
couple of years.
the tax system being processed and submitted online using digital records.
What is Making Tax Digital (MTD)? Making Tax Digital is a government
What does it mean by digital records?
initiative to “make it easier for
HMRC have provided a list of the
individuals and businesses to get
information required to be kept in a digital format for MTD for VAT purposes. This includes: ■ your business name, address and VAT registration number ■ any VAT accounting schemes you use
Ruth Chettle Canary Accounting After spending the previous 12 years working in a number of Northamptonshire practices, Ruth decided to take the leap and set up her own practice in January 2020. Specialising in looking after individuals and owner-managed businesses her aim is to make accounting and tax less stressful, more affordable and make things as easy for you as possible. 07805 973447 ruth@canaryaccounting.co.uk canaryaccounting.co.uk
■ the rate of VAT charged on goods and services you supply ■ reverse charge transactions – where you record the VAT on both the sale price and the purchase price of goods and services you buy ■ your total daily gross takings if you use a retail scheme ■ items you can reclaim VAT on if you use the Flat Rate Scheme HMRC have not yet provided a detailed list like this for MTD for income tax but have said digital records are to be kept for all business income and expense.
you sell, lease, transfer or hire out
MTD Phase 1: VAT registered businesses with taxable sales over £85,000
(supplies made)
The first phase was introduced in April
■ the VAT on goods and services you supply, for example everything
■ the VAT on goods and services you receive, for example everything you buy, lease, rent or hire (supplies received) ■ any adjustments you make to a return ■ the ‘time of supply’ and ‘value
2019 for VAT registered businesses with taxable sales over the VAT threshold (currently £85,000).From this date those businesses were required to keep digital records and use software to submit their VAT returns. This was a major change for VAT registered businesses as they needed
of supply’ (value excluding VAT)
to change the way they did their
for everything you buy and sell
bookkeeping. This meant moving away from handwritten cash books or
26 | Issue 9 – Finance
