PREPARE FOR WHEN MTD BECOMES MANDATORY FROM 1 APRIL 2022
Making Tax Digital (MTD) requires taxpayers to maintain electronic records and ‘communicate’ with HMRC digitally. Now is the time to look ahead and prepare for the next stages of the MTD programme.
VAT-registered businesses whose turnover is in excess of the VAT registration threshold of £85,000 are already within MTD for VAT and must keep digital records and file their VAT returns using MTD-compatible software. The requirement for links between different stages of the process, for example, from the records to the return, to be fully digital will apply for VAT return periods starting on or after Othe 1 April 2021.
While it is currently acceptable to cut and paste information from one application to another, for new VAT return periods starting on or after 1 April 2021, the links must be digital. This means, for example, using linked cells in spreadsheets, exporting, downloading and uploading files, automated data transfer or using a single API-enabled software package. HMRC have, however, promised a ‘soft landing’ as regards the imposition of penalties.
VAT registered businesses whose VATable turnover is below the VAT registration threshold of £85,000 can currently choose whether to join MTD for VAT voluntarily or remain outside it. However, MTD for VAT will become mandatory for all VAT-registered business from April 2022.
MTD for Income Tax
Making tax digital for income tax will apply initially to unincorporated businesses and landlords with, respectively, business income or income from property of more than £10,000 a year. It is due to be introduced for accounting periods beginning on or after 6 April 2023.
Please contact the office to discuss software options with one of the team. We provide Sage, QuickBooks, Xero & Absolute Software Licences that can be purchased from us cheaper than going straight to the provider.