Our Head of VAT, David McGeachy, reveals some surprising intel and rules around VAT which may very well be the ...
How ready are you for MTD?
8 February 2022
Those three words on everyone’s’ mind…
“Making Tax Digital”
UK tax legislation will soon see a shake up in how accounting records are kept and managed. Fear not, the Fortus team are here to guide businesses through the important changes and help you start making tracks towards the obligatory digital shift.
What’s ‘Making Tax Digital’?
In a nutshell, Making Tax Digital (MTD) for VAT came into play on 1st April 2019, requiring VAT registered businesses above the current turnover threshold of £85k, to do away with manual or Excel-based recording systems to submit VAT data to HMRC.
Instead, returns are to be submitted digitally.
It’s one of the largest and most significant changes to tax legislation we’ve seen for decades and will most certainly have an impact across the accounting industry.
For businesses, the aim of MTD is to simplify ‘getting tax right’. Whilst that sounds ideal, in reality, there’ll be a lot of learnings and new procedures to follow as HMRC progresses its MTD roadmap.
A breakdown of the digitalised taxes
All VAT-registered businesses, regardless of turnover, will need to go digital.
Those above the current threshold (£85,000) are already required to follow HMRC’s MTD rules.
In April 2022, VAT-registered businesses with a taxable turnover below the threshold will go digital.
Income Tax self-assessment
April 2024’s the go digital live date for self-employed businesses and landlords with annual business or property income above £10,000.
Whilst ‘going digital’ won’t be mandatory for Corporate Tax for some time (likely between 2026 and 2030), the government’s giving businesses an opportunity to take part in a pilot in advance.
Key dates (so far)
- 1st April 2019 – Mandatory for all businesses with a turnover of £85,000 and above to submit VAT returns digitally from this date.
- April 2021 – Third-party filing for non-VAT registered businesses came to an end, with the Business Tax Account becoming the designated channel.
- April 2021 – HMRC gave a period of time (they called it the ‘soft landing period’) to help businesses put digital links between VAT figures and the original source transactions. This period has now ended.
- September 2021 – HMRC share the news that MTD for Income Tax will now be introduced in April 2024, giving businesses an extra year to prepare for digitalisation. A helpful reprieve following the pandemic.
Get ahead of the ‘game’…
The introduction of a completely new process of filing taxes will bring about plenty of challenges for businesses, that’s for sure. It’s our job to help you overcome those.
Together, we’ve got time to think about:
- The best way to transition to digitalising all records (including land and property income).
- Reorganising timelines to meet quarterly filing requirements rather than once per year.
- Incorporating income into the MTD submission process including pension relief contributions, dividends, bank interest and any pensions received.