Making Tax Digital: A guide for businesses

Published · 2 min read

Making Tax Digital is the UK government’s pioneering initiative to take all tax submission online and to therefore enforce digital record keeping via computer software. VAT-registered businesses are the first to take part as of April 2019, with other forms of business tax following in 2020 and beyond.

The timeline and goals of the scheme have changed several times following government review and this white paper based around a series of frequently asked questions – aims to remove any ambiguity for both businesses and accountancy practices.

Beyond a full description of the Making Tax Digital scheme and a helpful business checklist, here are just some of the questions answered within the white paper:

  • How much will it cost businesses to comply with Making Tax Digital for VAT?
  • What does this mean for my business?
  • Will there be penalties for not complying with Making Tax Digital?
  • My business is not VAT registered and I don’t know if I will earn £85,000 this year. What should I do?

Making Tax Digital should make it easier for individuals and businesses to get their tax right and keep on top of their affairs as well as transforming HM Revenue and Customs (HMRC) into a world leading, digital tax authority. Ultimately, it will make life easier for everybody.

This guide can help your business or practice ease itself into the process with the minimum of fuss and stress.

Below is an excerpt from the guide.

Making Tax Digital: A guide for businesses

Not sure what Making Tax Digital is and how it will impact your business from April 2019? Download this free guide to find out what you need to do to prepare for it.

Get your free guide

What is Making Tax Digital?

Making Tax Digital (MTD) is a key part of the government’s plans to make it easier for individuals and businesses to get their tax right and keep on top of their affairs as well as transforming HM Revenue and Customs (HMRC) into a world leading, digital tax authority.

This is one part of a vital journey the UK needs to take to tackle low productivity and improve the business environment for SMEs, the backbone of
the British economy.

On 13 July 2017, HM Treasury and HMRC published its second Finance Bill of 2017, which included changes to MTD. The changes to MTD now mean that:

  • Only businesses with a turnover above the VAT threshold – currently £85,000 – will have to keep digital records and only for VAT purposes
  • They will only need to do so from April 2019
  • Businesses will not be asked to keep digital records or update HMRC quarterly for other taxes until at least April 2020

On 28 February 2018 new secondary legislation was enacted (SI 261/2018: The Value Added Tax (Amendment) Regulations 2018) to implement the revised MTD requirements.

The new rules mandate that VAT registered businesses with a taxable turnover above the VAT registration threshold must from 1 April 2019:

  • Keep records in a digital form
  • File their VAT returns via MTD enabled software

HMRC’s latest draft MTD VAT notice states that, while the complete set of digital records to meet MTD requirements do not all have to held be in one place or programme, there must be a digital link between these pieces of software used.

Once finalised, this section of the draft VAT notice will be given force of law and will therefore be a mandatory requirement.

For more useful advice, download your free guide – Making Tax Digital: A guide for businesses.

Making Tax Digital: A guide for businesses

Not sure what Making Tax Digital is and how it will impact your business from April 2019? Download this free guide to find out what you need to do to prepare for it.

Get your free guide

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