In the near future, every business will have a digital tax account and will have to report quarterly to HMRC, using compatible software. Every VAT registered business needs to be MTD compliant and the exact date that this will apply to you depends on a number of factors.

What is Making Tax Digital?

Making Tax Digital (MTD) is the government’s initiative to transform the tax system by asking businesses and individuals to interact with HMRC digitally. The new system aims to be transparent and accessible and to reduce burdens for taxpayers.

By 2020, businesses and individual taxpayers will be able to register, file, pay and update all their information online. There are many benefits for taxpayers:

  • MTD will help individuals and businesses stay on top of their tax affairs.
  • Taxpayers won’t have to wait till the end of the year to know how much tax they owe.
  • All information relating to tax is stored all together in an individual’s or business’s digital tax account.
  • Digital record keeping software will be linked directly to HMRC systems, so that taxpayers can send and receive information to and from HMRC digitally.
  • Traditional tax returns will become a thing of the past, as relevant information will be fed electronically into the digital tax accounts.

Need some help understanding the implications of MTD for your business? Get in touch below.

What are the timescales for MTD?

From April 2019, the following will have to report to HMRC digitally: all VAT registered businesses and organisations (including sole traders, partnerships, limited companies, non-UK businesses registered for UK VAT, trusts and charities) with turnover above the VAT threshold. Businesses with a turnover below the VAT threshold will not have to operate MTD, but can choose to do so voluntarily.

From April 2020, businesses will communicate with HMRC digitally for all other taxes, including income tax and Corporation Tax.

For more information on when your business will have to start reporting to HMRC digitally, please get in touch.

How will MTD affect me?

HMRC’s detailed proposals cover all aspects of the new reporting arrangements and we would be happy to discuss these with you in more detail to help you understand how it affects you and your business.

One of the most important aspects of MTD for businesses is finding the right compatible software to send and receive information to and from HMRC.

Our team of experts is here to help you find the right software for you. Get in touch below.

Want to know more about how we can help you? Contact us today on 020 3700 6715