Making Tax Digital
According to HMRC over £8 billion every year is lost through avoidable errors with the existing system. Making Tax Digital (MTD) 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. It will help you have an up-to-date view of their tax position, so you can manage your finances. This can create more business opportunities.
MTD is one of the biggest accounting shake-ups ever seen in the UK. As such, many affected businesses will have to fundamentally change how their finances are run. This means it’s the end of the annual tax returns for millions.
Every individual and business will now have access to their own personalised digital tax account. Virtually tax/NIC management and payment will be online and HMRC’s ambition is to become one of the most digitally advanced tax administrations in the world.
Several concerns have been raised and as a result the government has announced that implementation of MTD for Business has been amended to ensure businesses have plenty of time to adapt to the changes.
Businesses have until April 2019 to apply MTD and then only to meet their VAT obligations. This will apply to businesses who have a turnover above the VAT threshold
The government remains committed to guarantee we can deliver a modern digital tax system for all businesses and their agents, supporting them to get their tax right and reducing the amount of tax lost by preventing error.
Making Tax Digital Dates
Previously most businesses were to be included within the move to MTD by April 2019. This has now changed. In the draft Finance Bill (2017) the government has announced the following changes:
Foundations of Making Tax Digital
Better use of information
Making Tax Digital presents significant benefits for our customers. It will mean that they will not have to give HMRC information that it already has, for instance from employers, banks, building societies and other government departments.
Digital tax accounts for all will mean that customers can see the information that HMRC holds and be able to check at any time that their details are complete and correct.
Tax in real time
Our customers should not have to wait until the end of the year to know how much tax they should pay. HMRC will collect and process information affecting tax as close to real time as possible, to help prevent errors and stop tax due or repayments owed building up.
A single financial account
Most taxpayers cannot see their liabilities and entitlements in one place. By 2020, customers will be able to see a comprehensive financial picture in their digital account.
Interacting digitally with customers
You will be able to interact with HMRC digitally and at a time to suit them. You already have access to a digital account which will present you with an increasingly personalised picture of their tax affairs, along with prompts, advice and support through web chat and secure messaging.
Who is exempt
HMRC have made clear of the exemptions for organisations:
To be ready for MTD please remember the key facts.
When MTD comes into practice from April 2019 HMRC will not provide you or your clients with the tools for your digital records and submission. These will only be offered by software providers for example Sage.
There are no options of opting out from MTD. One you start reporting VAT under MTD there is no turning back.
Updates will need to be made quarterly to HMRC.
Standing data such as a client’s VAT registration number, business name and address, and VAT accounting scheme, will be collected at the registration point of Making Tax Digital. This information will not need to be submitted with each update unless there is a change.
If you have any further question, please contact do not hesitate to contact us. Please call us on 0161 339 4989 or email email@example.com.