THE GOVERNMENT’S Making Tax Digital (MTD) programme has been officially launched today (1 April 2019). The HM Revenue and Customs (HMRC) programme will become law for over one million VAT registered businesses earning over £85,000.
The new rules, first announced in 2015, will mean most businesses above the VAT threshold will need to keep their records digitally. VAT return will also have to be submitted using MTD-compatible software for VAT periods starting on, or after, 1 April 2019.
Nearly 100,000 businesses have already signed up to the new service, with a further 4,000 joining each day, according to HMRC.
During the first year of VAT mandation, HMRC said it will take a soft approach to penalties by not issuing, filing, or record keeping penalties where businesses are doing their best to comply with MTD.
Mel Stride MP, Financial Secretary to the Treasury, said: “Delivering Making Tax Digital for VAT is the first step toward our ambition to create one of the most digitally advanced tax authorities in the world.
“The rules that come in from today will give businesses more control over their finances, allowing them to spend their time focusing on innovation, growth and the creation of jobs.”
Theresa Middleton, Director of the Making Tax Digital for Business Programme, said: “Tens of thousands of businesses joined our pilot over the last six months and have helped us to test and improve the live service ensuring we have the right support in place to help people transition.
“Now is the time for those businesses affected by MTD who haven’t done so already to begin preparing to switchover and start experiencing the benefits MTD has to offer. You don’t necessarily need to sign-up from day one, but you do need to make sure you’re keeping your records digitally for your next VAT period which starts on or after 1 April.”
What do businesses need to do now?
- Firstly, find out if your business is affected by the Making Tax Digital changes and what you need to do if it is.
- 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. GOV.UK web pages provide information on a variety of products, from free software for businesses with more straightforward tax affairs, to paid solutions. There are also products that can be used in conjunction with a spreadsheet for those businesses that don’t want to change their underlying record keeping system.