Making Tax Digital (MTD) for VAT is coming into force on 1st April 2019, HMRC have started writing to all businesses that are affected by MTD for VAT.
The first 200,000 letters have been released by HMRC to firms who meet the eligible criteria to join the MTD pilot. HMRC are staggering the release of letters in waves to monitor their impact and response. Each letter contains different information on MTD with an aim of finding the must impactful messaging for MTD.
The first phase of letters was released on 8th November and outlined to firms who fit the criteria of MTD. Also, it outlined the way VAT reporting is changing and the new way of submitting your VAT returns if MTD applies to them. The second phase announced the modernisation of the UK’s VAT reporting system and the need for businesses to adapt now.
Who is affected by Making Tax Digital for VAT and when will it apply?
MTD applies to any business with a turnover of £85,000 or more, but by 2021 all businesses will be affected by the change. Under MTD for VAT, affected businesses will no longer be able to use the government gateway portal. Instead, they must submit their VAT returns via MTD-compliant software and they must maintain their records digitally.
VAT returns must also be submitted quarterly. The first digital, quarterly VAT returns are due for submission by 7th August 2019 and any business that fits the criteria for MTD who does not submit their returns will face penalties.
Why is it happening?
MTD is a legislation passed by HMRC designed to make taxation a quick and simple process. You will have a digital account where you will be able to access all of your information in one place showing a real-time view of your tax affairs. HMRC believe there is a £6 million short fall in tax, and this legislation will go some way in recovering this.
How will the Bailey Group help you?
To find out more on how the Bailey Group can help you and our solution to MTD, call or email us today for a free MTD audit, consultation, or advice call us on 0191 586 1615 or email us on firstname.lastname@example.org, or if you would like to attend our free MTD seminars click here.