Powered Now, UK Field Service Management App looks at how Making Tax Digital is going to have a profound impact on businesses over the next few...
What is Making Tax Digital (MTD)?
Key facts: Making Tax Digital (MTD) is the HMRC project designed to get all businesses and individuals to start keeping ...
Making Tax Digital (MTD) is the HMRC project designed to get all businesses and individuals to start keeping their accounting and tax records on a computer. There is a rolling program over several years that will eventually mean that everything happens in a joined-up way – no more having to tell HMRC information that they already know.
At the moment, MTD for individuals is on hold.
The program to get businesses to report everything to do with tax electronically and receive everything back the same way is in full swing. Critically, this is not just about filling in a web form. The records that back up VAT and tax returns must be held on computer and the tax returns and declarations must be based on those records.
HMRC has stated that most dates for tax reporting and payment will not change under MTD.
After several false starts, HMRC are trying to get one of the part of MTD fully up and running which is VAT. They have probably chosen VAT because:
- The return is relatively straight forward
- Companies that are VAT registered (and therefore have sales of over £85,000) will be better equipped to comply than sole traders
A recent House of Lords report has heavily criticised MTD for VAT saying that people are not ready. After the multitude of delays it is expected that the deadline will stay although enforcement is likely to be be soft at first.
VAT will continue to be paid quarterly, and income tax will still be paid in three instalments. Already, large companies pay corporation tax in quarterly instalments. Where companies have profits over £20m then corporation tax instalments will be paid earlier from 1 April 2019.