Less than a week left until HMRC makes tax digital for VAT
There is less than one week to go until Making Tax Digital for VAT is introduced for more than a million businesses.
According to HMRC, more than 3,000 businesses are now signing up every day to experience a more integrated approach to business and tax.
For VAT periods starting from 1 April 2019, most businesses above the VAT threshold will need to keep their records digitally and submit their VAT return using MTD-compatible software.
Almost 1.2 million businesses will be affected by MTD, first announced in 2015, which will make it easier for them to get their tax right. HMRC has urged businesses to get ready now and has written to every business that will be mandated with information on what they should do and how.
Over 70,000 businesses have already signed up to the new service and research in December showed that 83 per cent of those familiar with MTD had already started to prepare.
"In a world where businesses are already banking, paying bills and shopping online, it is important that the tax system moves into the 21st century.
"Making Tax Digital gives businesses more control over their finances, allowing them to spend their time focusing on innovation, growth and the creation of jobs," Mel Stride, Financial Secretary to the Treasury, said.
At the moment, there are over 220 software products for businesses to choose from at a range of prices, including free ones, offering different levels of functionality.
"I’d urge any business affected by MTD to start preparing now, and to join the thousands of others who are already experiencing the benefits MTD has to offer," Theresa Middleton, director of the Making Tax Digital for Business Programme, said.
What do businesses need to do?
Accountants or other tax representatives will already be aware of MTD and will advise businesses how and when they need to make changes to be ready for the new service.
Those already using software will simply need to ensure it is MTD-compatible then sign up to the new service and authorise their software for MTD.
HMRC explained that, for those who are not using an accountant or don’t currently use software, it is quick and easy to sign up and there is lots of information available to help them prepare:
- Take steps to find out if your business is affected by the Making Tax Digital changes and what you need to do if it is. Most businesses above the VAT threshold have to start keeping their records digitally and sending their VAT return to HMRC direct from their software for VAT periods starting on or after 1 April.
- Talk to your accountant or agent – if you use one to manage your VAT affairs – about how they are making returns MTD-compliant.
- Speak to your software provider if you already use software to ensure it will be compatible.
- Those businesses that are either not represented by an accountant and/or do not already use software will need to select software to use and sign up to MTD, then authorise their new software for MTD.
MTD is part of the government’s #SmarterGov campaign, which was launched to drive innovation through the public sector.