Changes are coming into effect, regarding the way companies file for VAT. Making Tax Digital for Business (MTDfB) is an HMRC initiative designed to make the UK tax system more effective, efficient and easier for taxpayers.
It begins on 1 April 2019 with MTD for VAT. This is the first of what will be a number of changes to the tax system, although changes to income tax and corporation tax will not come in until at least 2020.
From April, most VAT-registered businesses above the £85,000 registration threshold will be required to keep digital records and submit their VAT returns using compatible software, defined as ‘a software program or set of compatible software programs which can connect to HMRC systems via an Application Programming Interface (API)’.
After 1 April it will no longer be possible for affected businesses to complete a paper-based return manually or to file VAT online at the HMRC website. The requirement will remain in place even for businesses which subsequently fall below the registration threshold.
Businesses who have not already taken steps to prepare for MTDfB should speak to their accountants now and be prepared to start using compliant software for the preparation of their accounts, if they do not do so already.