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Making Tax Digital from the 1st April 2019
Making Tax Digital from the 1st April 2019
Making Tax Digital is a key part of the Government’s plans to make it easier for individuals and businesses to get their tax right and keep on top of their affairs.
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The primary aim of Making Tax Digital is to make the administration of tax effective and easier for taxpayers through the fully digitalised tax system by 2020, which in turn will reduce the overheads for HMRC for managing tax.
HMRC’s ambition is to become one of the most digitally advanced tax administrations in the world. Making Tax Digital is making fundamental changes to the way the tax system works – transforming tax administration.
The changes will apply to a wide range of tax payers including most business, self-employed professionals and landlords.
In summary, how will businesses by affected?:
• A business with a turnover above the VAT threshold – currently £85,000, from April 2019 will need to process VAT returns digitally.
• A business will no longer be able to add their VAT figures to the HMRC website, they must move to electronic uploads from their accounting system to HMRCs system.
• Businesses will not be asked to keep digital records or update HMRC quarterly for other taxes until at least April 2020. HMRC has not released specific details for this to happen.
• There is no soft approach to Making Tax Digital the live date is 1st April 2019 and businesses must comply from that date. It is a mandatory requirement and there are no exceptions.
• The deadlines for sending VAT returns and making payments are not changing, including for monthly, quarterly and annual VAT return schemes.
This is a massive change for a lot of business and preparation needs to be started as soon as possible.
Making Tax Digital for VAT is enforced by law and is therefore a mandatory requirement and you cannot opt out.
Helping businesses, self-employed people and landlords get it right first time
The majority of customers want to get their tax right, but the latest tax gap figures show that too many find this hard, with avoidable mistakes costing the Exchequer over £9 billion a year.
The improved accuracy that digital records provide, along with the help built into many software products and the fact that information is sent directly to HMRC from the digital records, avoiding transposition errors, should reduce the amount of tax lost to these avoidable errors.
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