The UK VAT system replaces manual processes with digital ones. HMRC’s new policies are designed to save time, reduce errors and cut the risk of penalties – so it’s good news for business in the long run.
It depends on the size and type of business operation. HMRC is doing a gradual roll out of Making Tax Digital, starting with Making Tax Digital for VAT. The first businesses to be affected will be VAT registered and have a taxable turnover above the VAT threshold (currently £85k) when MTD begins. If this applies to you, the chances are you’ll need to comply with the new rules — unless you meet the exemption criteria.
Who is exempt?
Businesses who are already exempt from filing their VAT returns electronically are also exempt from Making Tax Digital for VAT, unless they choose to take part. They can do this by informing HMRC in writing.
When does Making Tax Digital for VAT start?
Over 96% of businesses affected by MTD need to start following the rules from the beginning of their first VAT period starting on or after 1 April 2019. This includes businesses whose revenue exceeds the VAT threshold during the year. Also, once the business gone over the £85k threshold, it always be required to follow the rules for MTD, unless it is de-register from VAT.
You can authorise ICOTAX (your accountant/bookkeeper) to act on your behalf in the Making Tax Digital VAT service. We are here to help you and offer our business support services. That means less time worrying about your taxes and more time growing your business. Please do not hesitate to discuss your requirements with us.