MAKING TAX DIGITAL EXTENDED

HMRC’s flagship Making Tax Digital online quarterly reporting is being significantly extended with legislation proposed in the Finance Bill 2020-21 bringing all VAT registered businesses into the system from April 2022 and extending it to include income tax self assessment from April 2023.

Since April 2019, the majority of VAT registered businesses with a taxable turnover above that VAT threshold of £85,000 have been keeping digital VAT records and submitting VAT returns using MTD compatible software. 
From April 2022, it will be a requirement for all VAT registered businesses to switch to Making Tax Digital regardless of their turnover.

In April 2023, the programme will be extended to individuals that file self-assessment income tax returns for business or property income in excess of £10,000 annually.

The Government’s extension plans and the dates they are being introduced from should give businesses and individuals plenty of time to make sure that they are ready to make the switch to making tax digital.
ICAEW states;

 ‘The government's view is that digital records are more accurate and avoidable mistakes cost the Exchequer around £8.5bn a year. HMRC considers that the amount of tax lost to these avoidable errors is reduced, but not necessarily eliminated, via:

• the improved accuracy provided by digital records,
• the help built into many software products, and
• the fact that information is sent directly to HMRC from the digital records avoiding transposition errors.’

The Government will consult in the autumn of 2020 on plans to extend MTD to incorporated businesses with Corporate Tax obligations, but has given no indication on when this might be introduced.

The government hopes that delaying the extension of MTD to taxes other than VAT until April 2023 will also allow software firms to develop new products that are compatible with HMRC’s systems.

How can Moore (South) help you prepare for making tax digital?

Currently, there are 539 MTD registered programmes for businesses to file VAT returns. At Moore (South) we have been working with our clients on a cloud accounting software called OneClick. This software allows us to connect, communicate and collaborate anytime, anywhere and on any device.

Included in this workspace is a complete Making Tax Digital toolset that incorporates MTD for VAT, MTD for Income Tax functionality, quarterly reporting and the digital tax account.

You can find out more about OneClick by watching our video here.