Digital tax will be taxing
By the end of March 2019, businesses will need to have prepared for what many consider to be the biggest change for years in how they deal with HMRC. The change has nothing to do with Brexit, instead it comes from what HMRC calls Making Tax Digital – MTD.
Jason Piper, senior manager for tax and business Law at accounting body ACCA, says the “the underlying goal is to transform the whole UK tax system, both HMRC’s internal IT infrastructure and the way that taxpayers engage with it.”
But there have been problems with the rollout that have been compounded by unprecedented political developments such as the snap election and the Brexit referendum. The result is that the initial plans to force virtually all businesses to keep their records for profits taxes digitally from 2018 were abandoned; now all but the barest bones of MTD have been put on hold to free up resource for Brexit.
From April 2019 HMRC will have MTD in place for VAT for all businesses above the compulsory registration threshold of £85,000, whether they report monthly or quarterly or whether they are net payers or reclaimers of VAT. Income and Corporation Tax will follow eventually.
As Jason notes, MTD won’t apply to those businesses not (yet) registered for VAT – even if they do subsequently register for VAT, they’ll be outside of the regime until 2020. Unfortunately, that doesn’t necessarily mean they can relax.
Those who are VAT registered need to prepare.
For VAT, MTD alters how online filing works and makes a huge change to how businesses prepare for that submission. HMRC’s existing web portal will close for MTD filers and instead they’ll need to use specialist software to create and submit their return.
“The biggest, unprecedented, change,” explains Jason, “is in how much control HMRC’s processes will have over how you run your business. Under online filing, you submit your VAT return to HMRC in their prescribed digital format so it’s easy for them to process.
“You’re in control of how the records are kept that help you work out the nine numbers you need for the return. Under MTD, it’s not just how the nine figures reach HMRC that’s legally regulated; it’s how they’re calculated and the format (electronic) of the records that support it which is laid down in law.”
Latest Press Releases
Luxury British boatbuilder, Fairline Yachts, announces it is recruiting over 100 boat builders in a ... Read more
SUMNER, WA. (October 25, 2018) — Helly Hansen, the Norway-based global leader in sailing, today anno... Read more
British luxury motor yacht manufacturer, Fairline Yachts, is hosting the US debut of its new Targa 4... Read more
Shakespeare® Marine, world leader in marine antenna design, announces it is launching the, the world... Read more
Since its launch just over two years ago, Fairline Yachts has been winning awards for its new models... Read more
Leaders in waterproof bags and cases, OverBoard, prove that functionality doesn’t have to be boring ... Read more