‘Making Tax Digital’ (MTD) will be making more and more headlines this year because it represents a new way for businesses to report their tax affairs online. A government-led initiative, it will ultimately put an end to the annual tax return for the great majority of British businesses.
MTD will mark a big change in the way that companies engage with HMRC, so its importance should not be underestimated. With that in mind, we’re publishing this as the first in a new series of articles designed to explain the latest MTD-related developments, implications and advice.
Making Tax Digital: Introduction and Timescale
The scheme’s introduction will be phased in.
As from next year (April 2019) businesses with a turnover above the VAT threshold will be required by law to keep digital records and provide VAT returns via MTD-compatible software.
Businesses below the VAT threshold will have a little longer to prepare. MTD will be handling other forms of business taxation by 2020 and, although no fixed date has been set, this could also be the first year in which the system is rolled out to firms turning over between £10,000 and £85,000.
For VAT-registered companies, 2018 is therefore the last full year they will have to prepare themselves, so it makes sense to use this time to understand the requirements of MTD, and to plan accordingly.
Are you ready for Making Tax Digital?
At Jones Harris, we know that many of our longer-established clients are well organised and that their systems will readily adapt to the requirements of MTD.
Others are using proprietary accounting software whose developers are now busily working to make the transition as smooth and simple as possible. (In fact, we’ll be featuring guest posts from one or two developers as part of this same MTD series.)
However, there are companies that may struggle to take their accounting online.
Those that are still using paper-based systems or manually updated spreadsheets will face some important challenges, and now is the time to be preparing for change.
Prepare for Change
In the coming weeks and months, we’ll be explaining the nature of that change. We’ll be giving our recommendations for adapting to the demands of MTD and we’ll be inviting relevant originations to offer their on insights into different aspects of the process.
However, it’s important to note that the situation is fluid; the industry is still awaiting confirmation of certain timescales and processes, so we can’t yet bring you all the answers. That’s why this collection of articles has to be a series, and why we’re recommending that you keep checking back for updates.
In the meantime, if you have any questions or need any advice, please call us. We’ll always be happy to help.
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