When does it start & How would Making Tax Digital work?
MTD had been planned to start in April 2018. It will now start in April 2019 and only at that date for businesses with a turnover above the VAT threshold in order to meet their VAT obligations. The deadlines for sending VAT returns and making payments are not changing.
From April 2019, businesses above the £85,000threshold have to provide their VAT information to HMRC through Making Tax Digital software. This software will not be provided for free by HMRC. The software will be offered by third parties and HMRC has no plans to endorse a particular provider.
Businesses will send summary data to HMRC about their business each quarter, or more often if the business prefers. The summary data will consist of total income and total expenditure.
So what next?
HMRC are currently running a private pilot for volunteer VAT businesses and this was on an invite-only basis. The intention being that HMRC could work with software providers in order to test their systems on a small scale. Later this year a more public VAT pilot will be launched, though no specifics have been released.
On 13 July HMRC published VAT Notice 700/22 which explains the rules for Making Tax Digital for VAT and outlines what information you must keep on file digitally for VAT purposes. It also sets out what counts as functional compatible software for VAT.
A ‘stakeholder communications pack’ was also made available on this date for VAT purposes. Here is the link.
On 14 August HMRC released promotional material to tell us that they are working with more than 150 software suppliers who will provide software in time for April 2019 to meet the VAT requirements. Currently, 40 software providers are able to support the pilot scheme
Earlier this year, HMRC began inviting self-employed individuals and agents to join the Making Tax Digital (MTD) pilot for income tax. The aim being that taxpayers will see an estimate of how much tax they owe rather than waiting until the normal due dates.
HMRC have changed the timetable on a number of occasions and they are now adopting a wait and see attitude to see how the pilot scheme and the scheme for VAT registered business works in practice before implementing a scheme for others caught within the MTD net. Making Tax Digital for taxes other than VAT will begin ‘not before’ April 2020.
What do I need to do?
Over the next few months we will be advising clients on the next steps for their businesses. Please contact Jo Kemble if you would like to find out more email@example.com.
Useful links: https://www.gov.uk/government/publications/software-suppliers-supporting-making-tax-digital-for-vat/software-suppliers-supporting-making-tax-digital-for-vat
Source: Croner Taxwise