Making Tax Digital

What does Making Tax Digital mean?

This is basically the government’s plan of making tax more efficient, to streamline it making it easier for individuals and businesses to manage their taxes. 

Making Tax Digital (MTD) is gradually being introduced in stages. The first stage is MTD for VAT from 1 April 2019.  Once this has been implemented MTD for income tax and MTD for corporation tax are expected to be implemented from April 2020.

What this means for your business

From April 2019, all VAT-registered businesses (including sole traders, partnerships, limited companies, non-UK business registered for UK VAT, trusts and charities) with taxable turnover above the VAT threshold of £85,000 will be required to:

  • maintain digital accounting records.  This ceases the legal requirement to maintain paper records.
  • use HMRC-recognised to submit their VAT returns. Those within the scope of the MTD rules will no longer be able to access HMRC’s Government Gateway.
First MTD for VAT return
period
Date from which digital
accounting
records
must be kept
Deadline for first
MTD
for VAT return
1 April 2019 – 30 June 2019 1 April 2019 7 August 2019
1 May 2019 – 31 July 2019 1 May 2019 7 September 2019
1 June 2019 – 31 August 2019 1 June 2019 7 October 2019

MTD only applies to how information is reported to HMRC, there are no changes to what information is being report, the filing dates or the VAT rules.

Deferrals

A six-month deferral will apply to around 3.5% of businesses. The following types of businesses can wait until 1 October 2019 before they need to follow MTD for VAT requirements.

  • Trusts
  • ‘Not for profit’ organisations that are not companies
  • VAT divisions
  • VAT groups
  • Government departments
  • NHS Trusts
  • Local authorities and public corporations
  • Traders based overseas
  • Those required to make payments on account
  • Annual accounting scheme users

Exemptions

  • VAT registered businesses with taxable turnover below the VAT threshold
  • Businesses who are already exempt from filing their VAT returns electronically
  • Businesses in insolvency procedures

the MTD requirements will not apply.

How can we help you?

Invicta Accounting Ltd use HMRC-recognised Cloud Accounting. By joining Invicta, not only will you be prepared for MTD, we will set you up with your own client dashboard where you will:

  • Have access to accurate real-time key financial performances of the company
  • Be able to link your business bank account for live bank feeds keeping everything up to date
  • Be able to invoice clients online or, input timesheets and we will invoice your clients same day
  • Have access to who owes you money and who you owe money to at any time.

This means less time worrying about your taxes and more time growing your business! For your smooth transition to MTD give Invicta Accounting Ltd a call today on 01624 672358.