Making Tax Digital has now been live for just over a month, affecting the way most VAT-registered businesses file their VAT returns.
The Government’s decision to roll out Making Tax Digital for VAT came as no surprise as multiple European countries have been working with a similar initiative for more than a decade!
France introduced a similar digital filing system over 10 years ago and since then; the country has seen increased efficiency, and continuous evolution of an important foundation in which future innovations can be built.
What does this mean for the United Kingdom?
The next stage for Making Tax Digital comes in October 2019, when deferred organisations will have to comply in the new filing system.
Certain organisations with more complex requirements were excused from the April 2019 start date and given an extension of 6 months to prepare for the changes.
What's next?
The ‘soft-landing’ period for the majority of mandated businesses ends on 1st April 2020 (deferred businesses 1st October 2020).
Once this period has ended, it is expected that all mandated businesses will comply with MTD or will otherwise face penalties or prosecution.
From April 2021, we could see the remaining VAT-registered businesses with a turnover below the VAT threshold (£85,000) be mandated to comply with Making Tax Digital and digital filing procedures – however there is no official plan nor date for this yet.
The pilot scheme for MTD for income tax has started, and Making Tax Digital is also expected to become mandatory for corporation tax and income tax reporting at some point in the future, but Philip Hammond confirmed in the recent Spring Statement that this will not be until 2021 at the earliest.
This will eventually affect the self-employed, partnerships, trusts and landlords – essentially, anyone who completes a self-assessment tax return, although there will be exemptions for those who are unable to use digital tools on the grounds of religion, disability, age and remoteness of location. It is also likely that the very smallest businesses and landlords with annual turnover of less than £10,000 will remain outside MTD
Summary
Despite there being no definite dates for the rollout of Making Tax Digital for other taxes, the premise of this article is to make you aware that these changes will be coming as it is better to prepare beforehand.
If you are unsure about how or why Making Tax Digital will affect your business, contact your
local Moore office today, where we will be happy to help you.
It’s all in the cloud
Cloud accounting plays a massive part in the Government’s Making Tax Digital regime. Across our network, we offer a variety of
cloud accounting services where we will help you:
• Choose the right software
• Get set up and trained
• Migrate your data across
• Give support and guidance when needed