MAKING TAX DIGITAL – WHAT NEXT?
Your Tax Shop based in Ashton under Lyne have previously written about Making Tax Digital (MTD) making you aware that HM Revenue and Customs (HMRC) announced MTD it in the March 2015 Budget. Since then, there have been many consultations and changes in the implementation dates.
When does it start and how does it work?
MTD was planned to start in April 2018 but it was set back and Your Tax Shop, Tameside can confirm It will now start in April 2019. This date is only for businesses with a turnover above the VAT threshold to meet their VAT obligations. The deadlines for sending VAT returns and making payments are not changing.
From April 2019, businesses above the £85,000 VAT threshold must provide their VAT information to HMRC through Making Tax Digital software. We can confirm this software WILL NOT be provided for free by HMRC. The software will be offered by third parties and HMRC will not recommend a provider.
Businesses will send summary data to HMRC about their business each quarter through their preferred software, 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 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.
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 can 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. Your Tax Shop, Tameside are a part of this pilot scheme as it enables us to have more of an insight to HMRC’s future. The aim of this is 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 numerous times 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 NOT begin before April 2020.
Should you require any further information regarding MTD please contact one of the team here at Your Tax Shop based in Ashton-Under-Lyne.