As you may be aware, HMRC’s much discussed scheme to digitalise the UK tax system “Making Tax Digital” (MTD) went live for VAT on 1st April 2019.
This meant that this is now the mandatory method used for VAT reporting by VAT registered businesses and organisations (including sole traders, partnerships, limited companies and non-UK businesses registered for UK VAT) with turnover above the VAT threshold.
However, certain businesses do not have to enter into the initiative for another six months if they are covered by one of the categories where MTD has been deferred. This is usually if the VAT registered organisation has more complex VAT reporting issues, including:
- Trusts
- ‘Not-for-profit’ unincorporated organisations
- Local authorities and public corporations
- Public sector entities such as Government departments and NHS Trusts
The essential idea of Making Tax Digital is for individuals and businesses to get their tax right and keep on top of their affairs by maintaining digital accounting records.
Therefore MTD for Income Tax (for the self-employed and those with income from property) and MTD for Corporation Tax are expected to follow this implementation of MTD for VAT, but not before 2021 at the earliest.
Something that has become apparent from the introduction of the scheme for VAT is that the current online platform for VAT (and other taxes) does not link with the new Making Tax Digital platform. This, along with the fact that organisations are required to use compatible software products to submit their returns to HMRC, means that there will need to be substantial organisation in terms of enrolment if the upcoming implementations are to run smoothly.
