Every taxpayer in the UK, whether a business or individual, will have a Digital Tax Account set up with HMRC and all tax data will be held in one place in this Digital Tax Account (but not all at once). Paper records will no longer be sufficient or allowed.
For VAT registered businesses with a turnover above the VAT threshold, it has been mandatory to use digital compliant software from 1 April 2019.
MTD for income tax and non-VAT registered entities is expected to be implemented later, but not before 2021.
How is MTD going to be enforced?
A points-based system is expected to be put in place from 1 April 2021 to deal with the late digital submissions and a taxpayer will automatically receive one point every time they fail to make a return on time. Once points have been accumulated up to a certain threshold a penalty will be charged for every subsequent late submission.
What can you do now?
If you are VAT registered:
- You need to address MTD now and switch to digital accounting software from the beginning of your next financial accounting period.
- Technological advances in digital software mean Saint & Co can efficiently and cost effectively maintain your accounting records digitally and produce and submit your VAT Returns. Click here to contact us for a quote.
- Alternatively, we can set you up with your own subscription to “Xero” and you can enter your accounting information to prepare your own digital VAT Returns.
If you aren’t VAT registered:
- You will not be directly affected by MTD before 2021 but you should future proof your systems as far as possible
- Transfer on to a digital accounting package, such as Xero, as soon as possible
- If you currently maintain records on spreadsheet, you need to acquire software which will allow tax returns and updates to be made directly to HMRC in future
- If you currently use accounting software, this may need to be upgraded to be digitally compliant with HMRC requirements
Do you run a business? Find out how you might be affected by MTD.