Posted 13th February 19
Making Tax Digital is a key part of the government’s plans to modernise the ways in which individuals and businesses keep track of their tax requirements, and keep on top of their financial affairs.
Making Tax Digital is making fundamental changes to the way the tax system works – transforming tax administration with the aim of increasing effectiveness, efficiency, and ease of use for taxpayers.
According to HMRC, “VAT-registered businesses with a taxable turnover above the VAT threshold are required to use the Making Tax Digital service to keep records digitally and use software to submit their VAT returns from 1 April 2019” – making this a key change to the way tax works in the UK, and effecting a large proportion of business users.
There are some exceptions to the roll out of the Making Tax Digital initiative, including a small minority of VAT-registered businesses with more complex requirements;
“As part of planning for the VAT pilot, HMRC continued to engage with stakeholders and listen to their concerns about business readiness for Making Tax Digital. We have made the decision to delay mandation for these customers until 1 October 2019 to ensure there is sufficient time to test the service with them in the pilot before they are mandated to join”.
Upgrading the UK’s tax system in this manner means that online tax submissions will become the only option for majority of self-employed taxpayers and paper tax returns are likely to become a thing of the past in a comparatively short time period. The biggest change will be the introduction of a continuous system of reporting financial information to HMRC, which will replace the current annual Self-Assessment tax return, up to four times per year.
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