Making Tax Digital
Making Tax Digital (MTD) is an HMRC initiative to improve the effectiveness and efficiency of the UK tax system and reduce complexity. Ultimately HMRC wants everyone to get their tax right because they estimate that £9bn is list annually as a result of tax errors and ‘forgetfulness’.
MTD came into effect in April 2019, and compliance is unavoidable. From April 2019, VAT registered businesses will have to to submit their VAT return to HMRC through MTD compatible software.
Because of this we can quickly get you up to speed and MTD compliant.
To comply businesses will need to keep the following information as easily checked (by HMRC) digital records:
- Business name, principle place of business and VAT registration number and VAT accounting system used.
- Details about supplies made and received.
- The VAT account showing the audit trail between primary records and the VAT return.
Businesses will need to submit their VAT returns using compatible software, which will pull information from the digital records.
Just like current regulations digital records will need to be preserved for up to 6 years. Businesses not required to comply in April 2019 will still be able to participate on a voluntary basis, and in doing so ready themselves for the 2020 rollout of similar compliance requirements across all tax payers.
Just as accountancy services are a legitimate expense, so will be the costs involved in compliance; Software, implementation, hardware, training.
Nickalls is geared up for Digital Tax and already uses MTD compliant software, tools and systems. Because of this we can quickly get you up to speed and MTD ready.
You will not be surprised to hear that HMRC will implement a penalty system for noncompliance. The system is likely to be a points-based model with tax payers receiving a point every time they fail to submit on time, in correct format. The penalty system is likely to be introduced for VAT in 2020.
If you would like to know more about Making Tax Digital and how to use this HMRC innovation to business advantage, get in touch.