You are probably already familiar with the term ‘Making Tax Digital’ which refers to the digitisation of the tax sector, but did you know that there are only a few days to go for businesses to comply?
This long-awaited extension for MTD has been in the works since April 2019, when businesses liable for a VAT taxable turnover over £85,000 were required to comply with the rules.
From April 2022, all VAT-registered businesses (unless legally exempt) must comply with Making Tax Digital (MTD) rules, so get prepared now if you have not already!
How can businesses comply with the rules?
To be prepared for MTD for VAT, businesses must have compatible software in place to record information and report to HMRC.
It is important to note that MTD is also set to be rolled out for Income Tax from April 2024.
Sole traders or landlords with an annual turnover above £10,000 will be required to comply with MTD for Income Tax (ITSA) by that date.
What are the benefits of MTD?
By switching to maintaining digital records, this reduces the risk of losing documents and stores them all in one place.
Additionally, taking a more digital approach reduces the number of human errors.
In fact, the reduced errors from MTD are likely to have increased revenue, according to HM Revenues & Customs (HMRC).
Lucy Frazer, HM Treasury’s Financial Secretary to the Treasury, commented on MTD for VAT:
“Businesses using MTD are saving time on their tax affairs, streamlining their processes and boosting their productivity as a result.
“Our first move towards a modern, digital tax service – MTD makes it easier for businesses to get their tax right first time.”
For advice with related matters, contact our expert team today.