14 Dec Making Tax Digital – Are you up to speed? Guest Blog – Janet Clarke, J Clarke & Co.
The ‘Making Tax Digital’ scheme is a Government initiative aimed at streamlining tax affairs and creating efficiencies in a world that is often confusing for many.
Making Tax Digital (MTD) has seen the provision of a digital tax account for all individuals and businesses. This means that dealing with your tax affairs should be more efficient, easier to understand and more transparent.
Below we have listed a range of popular questions about the new VAT MTD scheme to shed some light on the changes:
Who will this apply to?
All businesses/persons registered for VAT with a taxable turnover exceeding the VAT threshold amount will now be part of the MTD scheme.
Businesses will need to continue submitting VAT via MTD even if their taxable turnover falls below the threshold at a later date.
When will businesses be required to make the switch to MTD?
Relevant businesses will be required to submit VAT Returns via the MTD system for VAT return periods that commence on or after 1st April 2019.
Businesses trading below the VAT threshold that are nevertheless registered for VAT will join MTD from 2020, although they may opt in to MTD earlier if they wish to do so.
What information will businesses have to report?
MTD VAT Returns will be the same as those submitted now. No transaction-level data will be required, although there will be a requirement for businesses to keep the underlying records in digital format.
Will the submission and payment deadlines be the same?
At present the filing and payment deadlines are not expected to change but this will be reviewed nearer to the implementation date.
How will HMRC know if a firm is above the VAT threshold?
As currently, the onus will be on businesses below the registration threshold to monitor their taxable turnover and inform HMRC if the threshold is breached.
What happens if turnover drops back below the VAT threshold?
Initial guidance implies MTD for VAT returns is a ‘one-way street’ with the requirement to submit MTD VAT returns and maintain the underlying data digitally only lapsing when a business de-registers for VAT.
What differences will businesses notice?
Businesses mandated to use the MTD system will need to submit VAT returns using MTD-compatible software. They will no longer have the option of filing the VAT returns using HMRC’s online portal.
If you would like to know more about the changes, or you’d like further assistance, don’t hesitate to get in touch. J Clarke & Co, tel: 01270 260095