Making Tax Digital is already compulsory for VAT registered businesses with a taxable turnover of over £85,000. At the present time, smaller businesses with less turnover aren’t currently obligated to comply. However, the extended date for Making Tax Digital for all VAT registered businesses is now confirmed as April 2022.
Making Tax Digital For VAT
As we know, MTD is already compulsory for VAT registered traders with an annual turnover exceeding £85,000. However, smaller VAT registered businesses with lower turnover have so far been exempt. This is, in part, due to plans to make tax digital for all VAT registered traders grinding to a halt in the face of Brexit and the coronavirus pandemic.
The subject was however revisited in July, as a part of the government’s ten-year plan to modernise the tax administration system. As part of this system, the Treasury outlined plans to restart the MTD program.
Extended Date For Making Tax Digital
On the 21st of July, Jesse Norman, the Financial Secretary of the Treasury, issued a written statement to outline the new procedures. The statement set out new plans for all VAT registered traders to use MTD compatible software to file their VAT returns and store records digitally.
Although an estimated 30% of smaller VAT registered businesses have adopted MTD voluntarily, it will become mandatory for VAT periods starting on and after 1 April 2022.
The Self-employed And Landlords
The plan also sets a goal for self-employed traders and landlords to commence quarterly reporting through MTD software. The extended date for Making Tax Digital for self-employed traders and landlords is April 2023. This means that all financial records must be kept digitally using MTD compliant software.
Many of these micro-businesses with turnover in excess of £10,000 per year will be drawn into MTD according to the new rules.
How Does This Affect You?
Whilst the roll-out of MTD has been different from that initially envisaged by HMRC, the Treasury now says
“There have also been lessons learned, which will be used to inform and shape the introduction of the next phases of digital implementation”.
This essentially means that they are still going ahead with the plans for all businesses to make tax digital regardless of size or turnover.
If the thought of keeping digital records and submitting them online is daunting you’re not alone. The good news is…
We Can Help!
At KA Farr & Co, not only are we Sage partners, but we offer support and guidance for all MTD compatible software.
If you’re struggling to understand what is required and by when our expert team of advisors will give you all the information you need.
You can give us a call on 01704 211434 or send us a message here.
We will help you to make sense of making tax digital, ensuring full compliance, avoiding any nasty fines or penalties.