Making Tax Digital (MTD) for VAT makes it mandatory for VAT-registered businesses above the £85k threshold to keep records and submit VAT returns digitally using compatible software.
1 April 2019 Updated as Making Tax Digital went live on 1 April 2019.
HMRC has released consultation papers that outline what it’s planning to do and ask for feedback from taxpayers and their accountants.
It's also now released summaries of responses to the consultations.
The current plans, in brief, are:
- The smallest businesses will be exempt from MTD – the "smallest businesses" will be businesses with annual turnover of less than £10,000.
- Taxpayers will send in summaries of their income and expenditure at least four times a year.
- More taxpayers will be able to use the cash basis of accounting.
Benefits of MTD
Tax recording will be more accurate, providing fewer opportunities for errors, miscalculations and fraudulent activity.
The process will be faster and more automated for businesses, accountants and HMRC, helping them save valuable time
With the right software, Making Tax Digital will make it easier for small businesses to record and file their tax returns online.