After announcing the Making Tax Digital (MTD) initiative in 2019, HM Revenue & Customs (HMRC) introduced its digital approach to accounting for VAT on 1 April 2019. This has affected over 2.5 million VAT registered businesses in the UK. If you need any help with this then please contact your local Perrys branch.
MTD for VAT started in April 2019 and will be extended to all VAT-registered businesses in April 2022. MTD for income tax (for the self-employed and those with income from property) is to be mandated from April 2023. A consultation on MTD for corporation tax is expected in 2020, but no start date has been announced.
MTD is designed to transform tax administration in the UK. It is 'a key part of the government's plans to make it easier for individuals and businesses to get their tax right and keep on top of their affairs'. The move to digitisation has been welcomed by many businesses, with 61% in strong agreement that it is the right thing to do, although over a quarter of organisations disagree.
The advantages of MTD are that it provides an efficient way of storing, submitting and accessing information. There are however challenges around practical issues such as software requirements, the skills needed for the software, and the complexities of new reporting periods and working digitally with international suppliers and partners.
The first impact of MTD is on VAT accounting. All VAT registered organisations need to be clear about exemptions and their full obligations under MTD.
Making Tax Digital is making fundamental changes to the way the tax system works – transforming tax administration so that it is more effective, more efficient and easier for tax payers to get their tax right.gov.uk
Important: The first priority for VAT registered UK businesses is to have a full understanding of the ins and outs of VAT reporting under MTD. It's critical to get advice from qualified accountants who have expert knowledge of this new way of working and at Perrys Accountants we can guide you through what's involved with the same refreshingly clear approach that we bring to all our work.
To make sure you're on the right track, and for a complete view of what Making Tax Digital for business means for you contact us today.