What is Making Tax Digital (MTD)?
Making tax digital is a government initiative to digitalise financial record keeping. Depending on the size of your business you will need to comply with the initiative on 1 April 2019 or 2020. The deadline is fast approaching yet many businesses are still completely unaware. The purpose of this blog is to help you better understand the initiative and your responsibilities in its compliance. I want to make sure you are well prepared well in advance of the deadline, to save yourself the last minute panic of compliance.
Why is MTD being introduced?
MTD is being introduced to ‘move with the times’. The current system is clunky and out of date. You have to sign in to multiple portals to access your information, MTD will mean all your data in to one place for ease and convenience.
The introduction of MTD will also help HMRC crack down on tax avoidance. Bank accounts will sync up with the portal, meaning HMRC can closer monitor income and expenditure and in theory stamp down on tax avoidance.
Who must comply and when?
All VAT registered businesses must comply with MTD 1 April 2019. If you are a business who is not registered but expect your taxable turnover to exceed the £85,000 VAT threshold by 1 April 2019 you must also comply.
The MTD initiative will extend to everyone by 2020, so it is best to start preparing now regardless of whether or not you need to comply in 2019.