Making Tax Digital – a summary

Making Tax Digital – a summary

On 13th July 2017, the Government announced Making Tax Digital will commence in April 2019 for VAT purposes for businesses with turnover above the VAT threshold (currently £85,000) and will be delayed until at least 2020 for all other businesses.

Under the proposed timetable:

• Only businesses with a turnover above the VAT threshold will have to keep digital records, and initially only for VAT purposes from 2019

• Businesses will not be asked to keep digital records, or to update HMRC quarterly for other taxes until at last 2020

This means that businesses and landlords with a turnover below the VAT threshold will be able to choose when to move to the new digital system.

As HMRC already require quarterly returns, no business will need to provide information to them more regularly during this initial phase than they do now.

All businesses and landlords will have at least two years to adapt to the changes before being asked to keep digital records for other taxes.

HMRC has already begun piloting the Making Tax Digital services and will continue to do so, testing the service with a variety of businesses.

HMRC will start to pilot Making Tax Digital for Businesses (MTDfB) for VAT by the end of the year, starting with small-scale, private testing, followed by a wider, live pilot starting in Spring 2018. This will allow for well over a year of testing before any businesses are mandated to use HMRC’s new system.

Making Tax Digital and Encore

As members of the Business Application Software Developers Association (BASDA), we are monitoring all MTD developments closely to ensure that once the service has been rolled out, Encore will enable our customers to submit information to HMRC in the required format.

Please contact us if you have any questions.