Making Tax Digital
From 1 April 2019, HMRC will be launching a new initiative; Making Tax Digital (MTD), which requires all UK businesses to submit their tax returns and payments online.
In the UK, it is estimated that around 57% of businesses are prepared to manage their payments online, whereas around 30% of business have made no preparation at all and only 3% of businesses having been involved in the MTD pilot.
Our Partner, OAC Solutions, support and assist law firms in converting data from their current systems to run their office accounts though cloud based accounting software. MTD is a complete change from the current processes, which sees most businesses manually entering their VAT returns into HMRC’s online portal.
The new, sustainable platform is designed to help promote ease and efficiency within the UK tax system and intends to ‘eliminate many of the existing paper-based processes, allowing businesses and their agents to devote more time and attention to maximizing business opportunities, encouraging growth and fostering good financial planning.”
MTD will be mandatory from 1st April 2019 for all VAT registered businesses that have a taxable turnover above the registration threshold of £85,000. Businesses that do not meet this threshold will not legally be required to operate digitally, however, can still choose to do so.
Currently, this deadline only refers to VAT returns, however, there are plans to roll-out
similar initiatives. HMRC have announced that by April 2020, secondary roll-outs will aim to digitalise businesses across income and corporate tax.
What does Making Tax Digital (MTD) mean for you?
There are three important components of the Making Tax Digital initiative, which are include:
OAC Solutions - an outsourcing legal cashiering and auditing service. As part of the TSP network you are entitled to a 5% discount on their standard pricing.
- Digital Records: Your transaction data will need to be stored digitally, and there are certain stipulations put forward by the HMRC on what details you’ll need to store.
- Digital Links: Your VAT returns must have ‘digital links’ to digital records. VAT Notice
700/22 includes examples of where a digital link is required and how you might use one.
- Digital Submission: All VAT returns will need to be submitted digitally via HMRC’s Making Tax Digital API.
To find out more about OAC you can contact us on 0207 3911 9713 or email us on firstname.lastname@example.org.
You can learn more about what is expected from the HMRC and how this is likely to affect you in their official VAT Notice.