The next phase of Making Tax Digital (MTD) starts from today, requiring all VAT-registered businesses to start keeping digital records and filing their VAT returns online.
The Government scheme became mandatory for VAT-registered businesses with a turnover above the £85,000 in April 2019. Today (Friday 1 April), it extends to those with a turnover below this threshold.
It will eventually become a requirement for other taxes, with MTD for income tax self-assessment currently set to kick in from April 2024.
According to HMRC, MTD should make it easier for businesses to keep on top of their taxes while also minimising errors.
As of December 2021, nearly 1.6 million taxpayers had already made the move over to MTD for VAT, with 11m returns submitted.
Those who don’t join may receive a penalty, although some businesses which are already exempt from filing VAT online may still be eligible for MTD exemption.
Lucy Frazer, Financial Secretary to the Treasury, said:
“Businesses using MTD are saving time on their tax affairs, streamlining their processes and boosting their productivity as a result.
“Our first move towards a modern, digital tax service – MTD makes it easier for businesses to get their tax right the first time.”
Ask us about filing your VAT returns under MTD.
