Businesses with turnover above the VAT threshold (£85,000) will be the first to join HMRC’s brave new digital world. This will revolutionise the way many businesses keep their books and accounts. It is HMRC’s hope that one day the tax return as we know it will have been entirely abolished, and all individuals and businesses will be required to submit their tax returns digitally.
All individuals and small businesses will have access to digital tax accounts, with the information HMRC needs already automatically uploaded. HMRC believe that you should never have to tell them information they already have and therefore under and over payments should be reduced. Digital accounts will give you a single, personalised view of your tax position across all liabilities and entitlements.
It is proposed that from April 2019, businesses with turnover above the VAT threshold (£85,000) will be required by law to keep their records on accounts software. Many people already do that – but there will be an additional requirement in that, the software must be capable of sending information to HMRC every three months. We know that the major software developers such as QuickBooks, Sage & Xero are Making Tax Digital compliant.:
To watch our short video series about MTD please click here.