What is Making Tax Digital (MTD)?
Making Tax Digital is a Treasury initiative that is aimed at making the UK one of the most digitally advanced country in the world so far as tax collection is concerned.
Businesses will have to do their bookkeeping using digital software that is capable of making quarterly reports to H. M. Customs and Excise directly from it. Handwritten bookkeeping done in either books or on sheets will no longer be an option for those who must comply with new requirements. Spreadsheets can still be used for bookkeeping, though it is extremely doubtful that anyone will be able to make their spreadsheets connect to H. M Customs & Excise’s computer system as they require.
Who will MTD affect?
At the moment the commencement dates of MTD have been significantly changed. The earliest start date is for businesses with turnover in excess of £85,000 who are VAT registered. These businesses will have to make quarterly VAT returns commencing after April 2019.
The requirement to report details of income and expenditure has been deferred until after April 2020. One is left to speculate if ultimately, HMRC will be willing to have two systems running side by side. One for those subject to MTD, and one for those who are not. As the object of MTD is to make tax collection more efficient it is unlikely that this duality will last for long. Ultimately we can expect all businesses to be caught by its requirements. At DEB we are recommending all business to convert to digital recording whether their MTD start date is April 2019 or not,
Watch our short video (4 mins) on how MTD will affect your business
See related posts on MTD
MTD – THE BASIC REQUIREMENTS
WHEN DOES MTD START?
WHEN DO YOU NEED TO MAKE THE CHANGES REQUIRED BY MTD
WHAT WILL BE THE COST TO BUSINESSES OF MTD
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