Making Tax Digital: Essential that businesses walk before they run
06 September 2018
Making Tax Digital (MTD) is a compulsory digital tax system that initially applies to VAT registered businesses with a turnover exceeding the VAT registration threshold (£85,000) and for VAT periods beginning on or after 1 April 2019.
All other taxes will be April 2020 at the earliest.
Some firms are concerned that they will struggle to make the transformation to a fully ‘digital’ practice, as expected of them by HMRC, in time for the impending deadline. Whilst most firms already file VAT returns online, the journey taken to compile the correct VAT figures is typically more analogue than digital and frequently relies on spreadsheets, the use of which has been hotly debated as MTD worked its way through the legislative process.
After significant pressure from trade and industry bodies and the accountancy profession alike, on July 13 HMRC released its final addendum to the VAT notice which states that spreadsheets can continue to be used, providing they are used in conjunction with a solution that can submit information digitally to HMRC.
This is great news for employers and businesses as this allows the transition to digital using appropriate ‘bridging’ software, rather than transforming to a completely new digital environment.