Wednesday, 20 March 2019

Is Your Business Ready For Tax Going Digital on 1st April 2019?

Making Tax Digital is a key part of the government’s plans to become one of the most digitally advanced tax administrations in the world. The programme will result in fundamental changes to the way the tax system works – with the aim of making it more effective, more efficient and easier for taxpayers to get their tax right.


VAT-registered businesses with a taxable turnover above the VAT threshold will be required to use the Making Tax Digital service to keep records digitally and use software to submit their VAT returns from 1 April 2019.

The exception to this is a small minority of VAT-registered businesses with more complex requirements. This week the government announced that in response to concerns about business readiness they have made the decision to delay mandation for these customers until 1 October 2019 to ensure there is sufficient time to test the service with them in the pilot before they are mandated to join - see the timeline below.

April 2019 
Making Tax Digital mandated for all customers (except those that have been deferred). 

October 2019
Making Tax Digital mandated for customers that have been deferred:
  • trusts
  • ‘not for profit’ organisations that are not set up as a company
  • VAT divisions
  • VAT groups
  • public sector entities required to provide additional information on their VAT return (Government departments, NHS Trusts)
  • local authorities
  • public corporations
  • traders based overseas
  • those required to make payments on account
  • annual accounting scheme users.

Plans to Make Income Tax Digital

Some businesses and agents are already keeping digital income tax records as part of a live pilot to test and develop the Making Tax Digital service for Income Tax. If you are a self-employed business or landlord you can voluntarily use software to keep business records digitally and send Income Tax updates to HMRC instead of filing a Self Assessment tax return.

Talking about the scheme HMRC said "The majority of customers want to get their tax right but the latest tax gap figures show that too many find this hard, with avoidable mistakes costing the Exchequer over £9 billion a year. The improved accuracy that digital records provide, along with the help built into many software products and the fact that information is sent directly to HMRC from the digital records, avoiding transposition errors, will reduce the amount of tax lost to these avoidable errors."

Other Taxes

Following extensive consultation with key stakeholders HMRC has decided to postpone the date for mandating businesses to digitally report for taxes other than VAT until at least April 2020.

Help and Support

HMRC provides a wide range of digital services and support for businesses and the self-employed.
Smarter experience for individuals - click here for more information.

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