When it comes to taxes, the next several years will witness many important developments, including the extension of MTD for VAT in April this year. One of HMRC’s main goals is to make the revenue collection system as effective and as seamless as possible.
What is Making Tax Digital (MTD)?
- The digitalization of the tax system by HMRC.
- HMRC-compliant software must be used by businesses and organisations.
- Quarterly reporting is required.
In April, what will be different? Who are the people that will be impacted?
All VAT-registered organisations (including those that fall below the threshold who voluntarily registered) will be subject to the new rules starting in April 2022.
They must use HMRC compliant software to submit and record VAT information on a quarterly basis, as well as follow the same requirements as organisations currently under the regime.
What should companies be doing to get themselves ready for this?
Businesses and organisations must have systems in place that allow them to submit and record information in accordance with HMRC’s regulations each quarter. The software must have the capacity to:
- Keep a digital copy of your records.
- Preserve digital records digitally.
- Use digital data stored in functionally compatible software, prepare a VAT or tax return and submit it to HMRC electronically
- Be able to voluntarily disclose VAT and tax information to HMRC
- Receive information from HMRC via the API platform.
Every three months, as well as once a year, they must report this data as required.
Maintaining an eye on the ever-changing tax scene is essential. The last thing anybody wants to do is pay too much tax or be penalised for breaking new laws.
For more information, visit the dedicated GOV.UK MTD website page here.
Get in contact with us today at firstname.lastname@example.org to keep your finances in order and reduce your tax bills.