29 November 2017
With no changes announced in last week’s Budget to the Making Tax Digital (MTD) scheme, the plan is still that businesses will have to keep digital records for VAT purposes from May 2019 and, from April 2020, all businesses under the VAT threshold will have to submit digital returns on a quarterly basis.
Recently I was listening to a Senior Officer from HMRC explaining that HMRC were jealous of the new VAT systems in China and Russia, and if HMRC had additional resources they would have liked to implement a similar system.
The system used in Russia and China is very similar to real-time implementation (RTI) for payroll used currently in the UK. In effect, as each invoice is processed through the taxpayer’s accounting system, it is also sent to the local tax authorities so they know how much VAT is owed to them on an ongoing basis.
It would seem Making Tax Digital is just the tip of the iceberg and in future we may end up with a full real-time information system for VAT.
We recommend that you start the process now in preparation for Making Tax Digital to be ready for May 2019. At UHY Hacker Young, we are taking a proactive approach to ensure that our clients are fully prepared. Many of our clients are transitioning to ‘cloud accounting’ before MTD comes into force, which enables business owners to access their accounting records in real time, thus allowing for more proactive business accounting and planning. Cloud accounting and Making Tax Digital go hand in hand; the real-time accounting information allowing straightforward MTD interaction.
Our cloud accounting offering and MTD expertise will ensure your business is compliant with the new regulations and facilitates a smooth transition in line with them. If you would like to learn more about cloud accounting and the services we provide please click here or fill out our contact form here.