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First announced by HMRC in 2015, Making Tax Digital became a reality for hundreds of business owners when MTD for VAT was made compulsory on 1 April 2019 for VAT-registered businesses with a taxable turnover of more than £85,000.
Nearly two years on and HMRC is now looking to move to the next phase of its plan and implement the same system for VAT-registered businesses with a taxable turnover below £85,000. Currently, for these businesses, the MTD for VAT scheme is voluntary. However, from April 2022 it will be mandatory for these businesses to keep digital records and submit their VAT returns using approved software.
Here at AMR Bookkeeping Solutions, we are well versed in the requirements for MTD for VAT and have helped numerous businesses transfer to the new system. If you are a business that isn't currently required to use the MTD for VAT system, we highly recommend you consider moving to the new system as soon as possible to allow plenty of time to deal with any potential issues and ensure your business experiences a smooth transition. Our blog What is Making Tax Digital? provides more details about the scheme and how we can help you to put it in place. Further information can also be found on the government's website here.
However, digitising VAT isn't the only plan HMRC has for overhauling the tax system. The Making Tax Digital scheme aims to improve the efficiency of the current system for business owners and individuals by streamlining the tax process and reducing the risk of errors. It's HMRC's ambition to become one of the most digitally advanced tax administrations in the world. This means it will be gradually phasing in changes to the tax system over the next six years with Making Tax Digital for Income Tax in April 2023 and Making Tax Digital for Corporation Tax in 2026.
If you need further information or advice about what Making Tax Digital means for you and your business, then we are here to help. Please give us a call on 01892 559480, or get in touch via our online enquiry form.