Making Tax Digital – HMRC’s initiative to revolutionise the taxation system and put it all online – is just weeks away from being implemented and accountants at Swindon’s Optimum Professional Services are urging affected businesses to get ready.
The new system comes into force from April 1, when VAT registered businesses, with a turnover above the £85,000 VAT threshold, must start submitting their VAT returns via Making Tax Digital compatible software for VAT periods starting on or after April 1. Using HMRC’s portal to make online returns will no longer be acceptable.
“We’ve been talking about it for a long time, and are running regular information events for our business clients to explain what Making Tax Digital is and how it will affect them,” said Richard Mathews, CEO at Optimum.
Richard Mathews, CEO, Optimum Professional Services
“The Government is running a media campaign to alert businesses, and accounting software providers are taking out TV and newspaper adverts to let businesses know but despite the publicity, it seems many business owners are still unsure of what MTD is, and whether it applies to them. The short answer is, yes it will apply, if not immediately then as the roll out continues.”
Under Making Tax Digital, businesses will be required to submit information through compatible software, and will no longer be able to use the HMRC portal.
If a business’s taxable turnover drops below the VAT registration threshold at any point after April 1, they are still required to continue to keep digital records and send HMRC the VAT returns using MTD-compatible software. This obligation doesn’t apply if they de-register from VAT or if they are exempt from MTD for VAT.
From 2020, the current plan is that all businesses will be drawn in. Ultimately, all tax returns, not just those for VAT, will need to be submitted quarterly through MTD. Businesses with a taxable turnover below the VAT threshold can now voluntarily sign up for MTD for their VAT returns.
There some exemptions from MTD. These include cases where using digital tools isn’t practical, for example due to age or disability, or in cases where the business owner is subject to an insolvency procedure.
Richard added: “For by far the majority of businesses Making Tax Digital cannot be avoided. Now is the time to act, particularly for those who will be drawn into the new system from April.”
Optimum Professional Services offers legal and accountancy services for business and individuals, including residential and commercial property legal services, wills and probate. For more information about Optimum Professional Services visit www.optps.co.uk/, email firstname.lastname@example.org or call 01793 538 198.