Making Tax Digital: An Oveview
What is “Making Tax Digital”?
The aim is to make the HMRC one of the most advanced tax administrations in the world. It completely changes the way the tax system works – making it more effective, efficient, and easier for taxpayers to get right.
The UK Government’s pilot service is currently open to half a million businesses and is planned to be extended in the next few months.
VAT-registered businesses with a taxable turnover above the VAT threshold are required to use the Making Tax Digital service to keep records digitally and use software to submit their VAT returns from 1 April 2019.
An exception to this is a small minority of VAT-registered businesses with complex requirements. This week, HMRC announced a 6-month deferral (to October 2019) on the introduction of Making Tax Digital for VAT for certain taxpayers.
Some businesses and agents are already keeping digital records and providing updates as part of a live pilot to test and develop the Making Tax Digital service for Income Tax.
Helping businesses, the self-employed & landlords
The latest VAT Gap figures show it is hard for customers to get their tax right. Making Tax Digital will improve accuracy, with help built into many software products. Also, the fact that information is sent directly to the HMRC reduces the amount of tax lost to errors.
The pace of mandation will be slowed and Making Tax Digital will not be mandated for taxes other than VAT until at least April 2020.