Making Tax Digital: Helping Businesses With Digital Tax Returns
Businesses need to plan ahead and prepare for extensions to the Government's 'Making Tax Digital' scheme.
Dated: 24 July 2020 Author: Mike Overington, VAT and Customs Specialist
A Government scheme which helps businesses and landlords keep on top of their tax affairs digitally is being extended.
Since Making Tax Digital was first introduced in 2019, more than 1.4 million businesses have joined the scheme, submitting over 6 million tax returns online.
In the latest ‘Making Tax Digital’ announcement this week, HMRC has outlined plans to grow and develop the programme by:
- Making MTD for Income Tax mandatory from 6th April 2023 for businesses and landlords with turnover in excess of £10,000
- Ensuring all businesses registered for VAT (including those below the VAT threshold) submit their VAT returns via MTD from April 2022
- Consulting this Autumn on how MTD can be extended to include Corporation Tax
Currently, businesses above the VAT threshold of £85,000 are covered by the system which requires them to keep digital records and provide VAT returns through online software.
However, from April 2022, the programme will be extended to all VAT-registered businesses with turnover below the VAT threshold.
HMRC aims to become one of the most digitally advanced tax administrations in the world and plans to transform tax administration to boost productivity, reduce errors and fraud and make it easier for taxpayers to get their taxes right.
HMRC are also planning a consultation programme as part of its 5-10 year vision to deliver its goals for the tax administration framework.
Mike Overington, VAT and Customs Specialist at Dains, said: “Compliance with the rules can be complex for smaller businesses and those whose VAT accounting is not straight forward such as partly exempt businesses and charities.
“Although 2022 may seem like a long time away for many businesses, it’s important that they plan ahead for the extensions to the Making Tax Digital scheme.
“Registering for the scheme now means businesses will be better prepared to comply with tax return deadlines through the digital system and allows them to focus on other more pressing priorities.”
Click here for more information about the Making Tax Digital programme,
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