Making Tax Digital (MTD) update

As you will now know, the government announced a major revision to the MTD timetable. Digital record-keeping and reporting are to be voluntary for smaller businesses and compulsory reporting is deferred to April 2019 for VAT and April 2020 at the earliest for other taxes. From 1 April 2019, businesses with taxable turnover over the VAT threshold – currently, £85,000 – will have to keep their VAT records digitally and submit VAT returns digitally to HMRC.

HMRC has recently published details of the penalties system for late submissions and payments under MTD confirming it plans to pursue a points-based model. Under this model, customers would receive a point every time they fail to submit online. A penalty will be charged at a certain threshold, which will be dependent on the frequency of their submission obligations. After this threshold has been reached a penalty will be charged for every subsequent submission failure. These points will, however, have a short shelf life and will expire after a period of good compliance. Draft legislation is expected in summer 2018 and we will keep you informed of this and any other changes as and when they happen.

If you are unsure of your obligations under Making Tax Digital then please get in touch as we will be pleased to help you with your first steps into HMRC’s digital future.

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