From April 2019, HMRC’s much vaunted ‘Making Tax Digital’ (MTD) scheme will apply to VAT registered traders, who have a turnover above the VAT threshold. Businesses with a turnover below the threshold (£85,000) will not be required to use the system, although they can choose to do so voluntarily.
Pilot studies are currently underway and the first businesses have started keeping digital records and providing updates to HMRC to test and develop the MTD service for income tax and NICs.
HMRC is keen to expand this pilot: “We will start to pilot Making Tax Digital for VAT starting with small-scale, private testing, followed by a wider, live pilot starting in Spring 2018. This will allow for well over a year of testing before any businesses are mandated to use the system. No business will be mandated before 2019”
From April 2019, businesses above the VAT threshold will be mandated to keep their records digitally and provide quarterly updates to HMRC for their VAT.
Watch this space to see the results of the pilot studies and monitor the progress of accounting software providers to create the necessary links with HMRC’s digital systems.
If you are registered for VAT, have an annual turnover above the current £85,000 limit, and have not yet considered how you are going to cope with MTD, please contact us so we can help you review your options.