Finally upon us?

 

For several years HMRC had been hinting that there would be a reform to tax dubbed "Making Tax Digital".  Quite what form this would take and what would be required of businesses and individuals was unknown until February 2018 with subsequent updates since, and "MTD" finally happening in April 2022.

 

At present MTD (Making Tax Digital) applies near exclusively to VAT and VAT registered businesses.  However there are currently plans for MTD to be rolled out across all taxes (including income tax) thus affecting all businesses and sole traders at some point in the near future.

 

What does MTD actually mean / hope to achieve in the long run?

 

• Digital record keeping / software (paper records will no longer be "compliant")

• A live tax account.  All individuals and businesses will be able to see a live balance of their tax liabilities and communications with HMRC

• No more tax returns?  In the very long term HMRC have stipulated that quarterly digital submissions will replace the "end of year" tax return

 

Most of the above plans are still very much just whispers and rumours.  But for now, MTD continues to only effect VAT registered businesses.

 

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So what does it all mean now!?

 

At the moment, the only confirmed requirements relate to VAT registered businesses:

 

• From April 2019 all VAT registered businesses above the VAT registration limit have had to submit their VAT returns via software.  The HMRC "free" portal ceased to exist, as well as paper VAT returns

• From April 2022 all VAT registered businesses below the VAT registration limit also have to submit their VAT returns via software

 

Essentially all VAT registered businesses now need to use bookkeeping software and all VAT returns are submitted via software (note there are some specific exceptions).

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Don't panic!

 

For our clients we offer two main lifelines to keep you compliant and hopefully removing any panic;

 

We recommend software that's right for you and help train you and transition to using software if you are not already... that's it.  You will have all the benefits of using software and have ongoing help and support, as well as the ability to file your VAT returns digitally.

 

For those that perhaps do not feel comfortable with software, or rather that we take the burden of bookkeeping and VAT returns away, we offer inhouse bookkeeping and VAT return preparation as we have always done.  Behind the scenes we will be using software on your behalf, so that you see "no change" but are happy knowing everything is being taken care of and filed.