What happens first?
The first focus that affects everyone from April 2019 is MTD for VAT
However, there will be many changes in the future…watch this space.
MTD will scoop up any tax payment over the tax threshold
In April VAT will be collected digitally. Digital income tax and corporation tax will follow later. But right now MTD is just for VAT. However, this is NOT going to go away. These changes are just the beginning, It’s important that businesses should consider the bigger picture and know further change will roll out regarding income and corporation tax. You have been warned,
At present MTD has 3 basic requirements:
You will need to:
You will basically need digital interaction with tax authorities. However if your VAT registration is particularly complex please be aware. For example if your VAT registration is pulled from different sources HMRC wants a seamless digital link. However, you can bring everything together in a spreadsheet then cut and paste to bring up the final 9 figures for your return. But HMRC is not developing a cut and paste system as an organisation. They want to be able to quickly get back to the beginning of source data in the future. This means you will need to be compliant with HMRC not vice versa. In the long term you will need to be using compliant software. There is a list on HMRC’s website. Right now it has to be MTD ready and compatible but not compliant at this stage. Do note that if you are using a manual cashbook it is not something that will be compliant for MTD in the future.
Be aware that from 1st April, VAT registered business, with a taxable turnover above £85 000, must keep their record digitally and use suitable software to submit VAT returns
However, businesses that are voluntarily VAT registered, remain outside of MTD for now.
MTD rules apply from your first VAT period beginning on or after the 1st April 2019
For VAT registered traders with more complex requirements you have a six month deferment until Oct 2019 (This includes: Trusts, VAT groups and not for profit orgs who are not companies
What’s the Timeline?
Oct 18 was the opening of the pilot scheme. For simple businesses it opened in Jan for flat rate, partnerships and the newly registered.
Most VAT registered businesses organisations will have to be ready for Making Tax Digital
Typically this is when the first VAT return is to be submitted under the new rules
There is where a 6 months deferral ceases and any remaining complex businesses will be mandated
This is when the soft landing period ceases for digital links. For the vast majority the soft landing period is not relevant – it applies more to those more complex organisations
If you need help to make your journey towards MTD much simpler then do contact us now and pop in for a cuppa. We can go through all this information and make your life much easier. It’s certainly worth a conversation if you’ve been putting off the inevitable. See you soon.
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