Making Tax Digital

The Financial Secretary to the Treasury and Paymaster General announced that Making Tax Digital for VAT will come into effect from April 2019. From that date, businesses with a turnover above the VAT threshold (currently £85,000) will have to:

*   Keep their records digitally (for VAT purposes only), and

*   Provide their VAT return information to HM Revenue and Customs (HMRC) through Making Tax Digital (MTD) functional

     compatible software.

He also confirmed that MTD will be available on a voluntary basis to other businesses, for both VAT and Income Tax.

The regulations will provide that if a business is in scope for MTD, it must use functional compatible software to meet the new requirements.

Functional compatible software means a software program or set of compatible software programs which can connect to HMRC systems via an Application Programming Interface (API). The functions of the compatible software must include:

*    Keeping records in a digital form as required by the regulations

*    Preserving digital records in a digital form as required by the regulations

*    Creating a VAT return from the digital records held in functional compatible software and providing HMRC with this information

      digitally.

*    Providing HMRC with VAT data on a voluntary basis

*    Receiving information from HMRC via the API platform in relation to a relevant entity’s compliance with obligations under the

     regulations

It is important to note that HMRC will not be providing free software and the government gateway link whereby you enter the figures into the box 1-9 template will no longer be available.