Last month HMRC published further information on MTD (Making Tax Digital) to support businesses and agents in the run up to the start of the mandatory MTD VAT service from April 2019.
As part of Making Tax Digital, businesses registered for VAT with a taxable turnover above the VAT registration threshold of £85,000 will need to keep VAT records digitally and file their VAT returns using MTD compatible software from their first VAT period starting on or after 1 April 2019. Businesses with a taxable turnover below the VAT threshold will not have to operate MTD, but can still choose to do so voluntarily.
It is increasingly common for business records and accounts to be kept digitally, in a software program on an electronic device, or maintained through such a device and stored using a cloud-based application.
However, the difference under MTD is that the software must be capable of keeping and maintaining the records specified in the regulations, preparing their VAT Returns using the information maintained in those digital records and communicating with HMRC digitally via their Application Programming Interface (API) platform. HMRC have been working closely with software providers to help them to bring a wide range of MTD products to market.
They have published a list of those that are already at the stage of having demonstrated a prototype product ready to start testing with businesses and/or agents.
There are still no confirmed dates for the introduction of MTD for Income Tax and Corporation Tax, however, the earliest that these could be introduced is April 2020.
We will be in touch with our VAT registered clients later this month to discuss the implications of mandatory MTD VAT service for you and put a plan into place to make sure you are ready for April 2019.
If you would like any further clarification please do not hesitate to contact us.