Making Tax Digital (MTD) is a huge change in the way businesses (and individuals) report tax and is still a source of concern for many businesses.
MTD is a government initiative aimed at simplifying the way businesses report their income, expenditure and taxes; making it easier for businesses to get their tax right and keep on top of their affairs.
HMRC introduced MTD, Making Tax Digital for VAT, on 1 April 2020 for businesses with a taxable turnover above the VAT threshold to keep digital VAT business records and send VAT returns using Making Tax Digital-compatible software.
What is the next milestone for MTD?
The major next milestone is for all VAT-registered businesses to sign up to MTD for VAT by April 2022. After that date, all VAT-registered businesses will need to keep digital records and submit their VAT Returns using MTD from within an API-enabled software.
Businesses currently using API-enabled software to submit non-MTD VAT return submissions will need to sign up to MTD for VAT voluntarily before April 2021, as HMRC has confirmed this will be no longer supported after this date.
If businesses are not ready for MTD, or if you are under the threshold or part of a VAT Group, some accounting software providers have created a new non-MTD VAT return which can generate the VAT amounts. Please note that by doing it this way, you will be required to submit the return manually using HMRC online services or by using MTD bridging software.
After April 2019 you’ll no longer be able to submit manual financial records. Mandatory digital record-keeping means that HMRC will only accept returns using software that supports MTD.
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