Making Tax Digital
What is Making Tax Digital?
HMRC has initiated a new system in place that enables all business owners and individuals to stay up and running with their taxes right on a digital platform with more frequency of Returns Submission.
In simple words, keeping the digital trend in mind, the government has planned to completely change the way taxes are recorded and data is submitted and received to and from HMRC.
Making Tax Digital (MTD) will be incepted with step by step implementation of different phases where the first phase will be started with VAT registered entities from 1st April 2019 and eventually will be implemented for other taxes.
Therefore, its high time you ask yourselves some important questions to be on track with MTD.
Who will be Affected ?
- From 1st April 2019, Making Tax Digital (MTD) will be applicable to VAT Registered business whose turnover is above the current VAT threshold of £85,000.
- Applicable to Sole traders, companies, LLPs, partnerships, and charities.
- For the VAT registered entities whose turnover is below the current threshold have the option to file their VAT information as per Making Tax Digital if they wish to do so.
Your Brighter Thinking MTD Toolkit
What are the key information?
|Starting From||1st April 2019|
|Exemptions||Similar to the current exemption applicable for electronic VAT filing, in terms of MTD, the business whose turnover is below the current threshold are eligible for automatic exemption|
|Software||Businesses and individuals will have to purchase a third party software for Making Tax Digital for VAT|
|Digital Requirements||As per the requirement of HRMC, the following information needs to be reported:
Further to this, it has been confirmed by HMRC that NOT all the preliminary invoices and receipts need to be stored digitally. But the records both paper and digital needs to be retained for six years at least.
|Flat rate VAT Scheme||There are no restrictions for the business with flat rate VAT scheme.|
|Monthly Returns||Making Tax Digital will enable businesses to increase their frequency of returns submission where it can be submitted monthly rather than quarterly.|
How will this Benefit You?
In regards to the businesses not using a third party software in order to maintain their records and data, it can become an administrative burden for this as it involves a lot of change to implement in the traditional method of record-keeping. However, this change of compliance with Making Tax Digital will bring in many benefits for the businesses as few are listed below:
- With the help of increased frequency in returns submission with real-time information; business will be able to generate
Once your internal processes and plans are put in place and the software system has been set up completely, it will be immensely helpful in reducing errors saving you enough time and instant real-time information which will ultimately lead to an efficient business and taxation.
In terms of the business who already have third-party software in use for the maintenance of their records, they will need to check with the software provider as not all software in the market are compliant with Making Tax Digital requirement.
How Can Makesworth Accountants Help You?
Its high time for the business owners and sole traders to embrace the change and start the implementation of Making Tax Digital before it’s too late.
Makesworth believes that every business is unique and so are the minds behind it. Hence, we pride on our customized services to our valued clients tailored as per their requirements. To make the journey of Making Tax Digital a pleasant and stress-free one, we have partnered with three leading software who are fully compliant with MTD:
We believe that these amazing software will turn out to be quite advantageous for our clients, especially with MTD.
The following flowchart will help you understand your position in MTD with the actions to take and the place where Makesworth will support you: