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.
Phase 1: April 2019
Businesses with turnover above the VAT threshold (£85,000) were the first to join HMRC’s brave new digital world in April 2019. This revolutionised the way many businesses were required keep their books and accounts. Making Tax Digital for VAT required the use of computerised bookkeeping software as well as the requirement to send VAT returns to them via software and not using the Government Gateway or business tax accounts.
Phase 2: April 2022
From April 2022 all VAT registered businesses will be required to join Making Tax Digital for VAT. Many voluntarily registered businesses already use software or Excel which meets the “digital records” requirement. However, the software used for bookkeeping must be capable of sending the VAT information to HMRC via a digital link. For small businesses we recommend QuickBooks, Freeagent & Xero as relatively inexpensive solutions. We also have bridging software solution for businesses who have software that isn’t capable of sending information to HMRC. We can offer setup, training and support on the software mentioned, as well as offering an outsourced bookkeeping solution.
Phase 3: April 2023
From April 2023 Making tax Digital for Income tax is scheduled to begin and you can read more about the plans for this phase by clicking here.
To watch our short video series about MTD please click here.