On 1 April 2019, HM Revenue and Customs (HMRC) introduced its new digital tax initiative – Making Tax Digital (MTD) – and its first phase, MTD for VAT.
The purpose of MTD is for self-employed individuals and small businesses to complete their tax returns and records digitally, intending to make it easier to keep on top of their tax affairs accurately. With this in motion, HMRC hopes to go paperless altogether.
MTD for VAT began in 2019 by using digital records and accounting software to complete VAT tax returns.
Upcoming deadlines for MTD
HMRC is introducing MTD gradually and currently only affects VAT-registered businesses with a taxable turnover above the £85,000 VAT threshold.
From April 2022
• All VAT-registered businesses need to comply with MTD for VAT
• MTD applies to taxpayers who file Income Tax Self Assessments for business or property income of more than £10,000 a year
From April 2023
• Self-Assessment taxpayers need to comply with MTD for Income Tax
• MTD applies to taxpayers who file Income Tax Self Assessments for business or property income of more than £10,000 per annum
MTD for VAT: keeping records
HMRC says the digital records you need to keep for MTD for VAT include:
• Company name and contact details
• VAT number
• Rate of VAT on any supplies made and received
• Time of supply
• VAT returns – any changes made
• Reverse charge transactions
• Daily gross takings
• Details of any schemes used
Ensuring you are up-to-date and complying with all things relating to MTD can be challenging. Therefore, it is vital to seek support. Find out how we can help you today by contacting us.