Making Tax Digital – Updated
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The original Making Tax Digital proposals phased in the implementation of digital record keeping and quarterly updating by businesses, the self-employed and landlords for Income Tax Self-Assessment (ITSA), Value Added Tax (VAT) and Corporation Tax (CT) between tax years 2018/19 and 2020/21.
Following representations about the scope and pace of the reforms, the government announced by Written Ministerial Statement, on 13 July 2017, that businesses would not be mandated to use the Making Tax Digital system until April 2019 and then only to meet their VAT obligations. This will apply to businesses with turnover above the VAT threshold (currently £85,000). Businesses with turnover below the VAT threshold will not be required to use the system but can choose to do so. Businesses will also be able opt in for other taxes, benefitting from a streamlined, digital experience.
This will give small businesses and landlords time to move to the new digital system at a pace that is more suited for them. Making Tax Digital will be available on a voluntary basis for these businesses until it becomes compulsory so that they can choose to join earlier to get a head start on the new process and start to enjoy the benefits of a digital system.
As VAT already requires quarterly returns, there will be no requirement for businesses to provide information on a more regular basis.
All businesses and landlords will now have at least two years to accommodate the changes before being asked to keep digital records for other taxes.
This is a great opportunity for us to take control of this process for our clients. We are currently implementing a strategy to start moving clients over to the digital system and are well ahead of schedule to meet these deadlines… watch this space.