As per proposed Making Tax Digital Timeline, the deadline for filing digital VAT returns is approaching soon. Certax Fitzrovia Ltd is helping its clients with complete support during the transition to the MTD. We ensure that you are not entangled in tax issues and focus on your business ambitions. Before you register for Making Tax Digital, you should understand what MTD is and what MTD technology requirements are. MTD is an ambitious step taken by HMRC to make itself one of the most digitally advanced tax administrations in the world.
The MTD aims to make UK tax more efficient, time saving and convenient for taxpayers. The Making Tax Digital Timeline for VAT is period starting from 1st April 2019. This means when these businesses submit their tax returns in March 2020 HMRC Making Tax Digital Timeline Date, they should be fully complaint to MTD. All VAT returns should be submitted using only MTD compatible software approved by HMRC. MTD is mandatory for all businesses with VAT registration threshold above £85,000 (as of 2019). Paper records are now not acceptable as per new tax legislation. Your business can only use HMRC’s Application Program Interfaces Platform.
Please note that he online services that are currently available will also stand withdrawn for those businesses with VAT registration above the mentioned threshold. Those with taxable turnover below the threshold £85,000 can still voluntarily register for MTD.
EXEMPTIONS FOR MAKING TAX DIGITAL TIMELINE DATE 1ST APRIL 2019:
The Making Tax Digital Timeline has been pushed off till 1st October 2019 for a very small proportion of businesses. These include those which have complex VAT calculations. The extension has been granted purely at HMRC jurisdiction. Examples include trusts, Not for Profit businesses (not set up as company), VAT groups, VAT divisions, public sector UK businesses, council authorities and overseas traders. The extended Making Tax Digital VAT timeline also include annual accounting scheme users.
Please note that the above types of organizations have not been exempted from the need to transition to digital records. There has been a Making Tax Digital delay allowed so that they sort out complications for their VAT records and integrate approved software for all their accounting records. All such organizations should have started their digital record keeping from Making Tax Digital Timeline date of 1st October 2019. Don’t forget to look at HMRC approved list of VAT software compatible with MTD.
Those who are completely excluded from use of digital records or the “digitally excluded” list include people who cannot use digital tools due to age, religion, disability, remoteness or any other reason.
Few days back we released news on TAX FACTS 2019- EVERYTHING YOU NEED TO KNOW ABOUT THIS YEAR’S TAX RATE AND ALLOWANCES
CONTENT OF MAKING TAX DIGITAL RECORDS:
You can use spreadsheets to calculate VAT on individual transactions and sum the VAT returns you need to file for. Make sure you use spreadsheets from a compatible application. HMRC requires you to use only Bridging software. This means that you cannot manually retype information but import the spreadsheet prepared in its original form. There is no requirement for additional records in MTD. All you are required to do is to keep records in digital format.
Tax records that need to be submitted as per Making Tax Digital Timeline must include information about business activities, its trading name, its principle address, VAT registration details and name of accounting scheme you use. For each supply transaction, you need to mention tax point i.e. time of supply, value of transaction excluding VAT and the rate of VAT charged.
We recently published WHAT IS CIS TAX REBATE AND HOW TO CLAIM IT? be sure to read it.
MAKING TAX DIGITAL TIMELINE FOR INDIVIDUALS, SELF EMPLOYED AND LAND LORDS:
As of now Making Tax Digital is compulsory only for VAT. A pilot program was run by HMRC for Making Tax Digital Income Tax in spring 2018. This program was voluntary and so far no Time line date has been announced making it compulsory. However, you may consider joining this. Make sure you use only HMRC approved list of Making Tax Digital Income Tax Software.
The mandate to make digital tax filing compulsory for individuals, landlords and self employed has been purposely delayed. As of now there is only a Making Tax Digital Timeline for VAT that is enforced by HMRC. It is expected that the complete transformation of manual tax system to digital one will take place in 2020 and 2021 tax submissions will all be digitized.