The government has announced that VAT registered businesses, rather than self-employed tax payers and landlords, will now be the first to be affected by Making Tax Digital. Businesses with turnovers below the VAT threshold (currently £85,000) will be exempt from mandatory quarterly reporting under the scheme, but are welcome to opt in voluntarily if they wish.
A big test for VAT registered businesses
The scheme – which was due to launch in April 2018 – will now be rolled out in April 2019, with a requirement for businesses with turnovers above the VAT threshold to keep digital records, primarily for VAT purposes only. Mandatory quarterly reporting for tax purposes will not start before 2020, allowing for the system to be fully tested in the interim.
How will VAT registered businesses be affected by digitalisation?
The VAT aspects of quarterly submissions will include a VAT return and therefore an additional declaration will be compulsory. Businesses will be required to use digital software and apps to complete the submission. Given that VAT returns are already filed on a quarterly basis, this should ensure a much smoother transition to the scheme.
How can I prepare my business for digital reporting?
At UHY Hacker Young, we are taking a proactive approach to ensure that our clients are fully prepared. Many of our clients are transitioning to ‘cloud accounting’ before MTD comes into force, which enables business owners to access their accounting records in real time, thus allowing for more proactive business accounting and planning. Cloud accounting and Making Tax Digital go hand in hand; the real-time accounting information allowing straightforward MTD interaction.
Our offering of cloud accounting and MTD expertise will ensure your business is compliant with the new regulations and facilitates a smooth transition to them. If you’re interested in getting your business ready for Making Tax Digital, please get in touch.