Posted on: 27 February 2019
We previously reported that the UK government had announced that as of April 2019, VAT registered businesses who exceed the VAT threshold would be required to keep and submit their tax records in a digital format. This is in an attempt to create a more efficient and effective system which makes it easier to get the tax right.
Making Tax Digital pilots
Making Tax Digital has been in the pilot stages with companies of different VAT statuses since October 2018, with some exceptions who were deferred from the pilot. Any business that has been previously deferred will start their pilot for Making Tax Digital in Spring 2019, and will start to fully use the system in October 2019.
You will likely be deferred if you are one of the following companies:
- Non-for-profit organisations that are not companies
- VAT divisions and groups
- Public sector companies, such as government departments or NHS
- Public corporations
- Traders based overseas
- Organisations who make payments on account
- Annual accounting scheme users
How to prepare for Making Tax Digital
Set up your account
If you haven’t already, set up your account through the government website. You may need to do this as soon as possible. Depending on the way you set up your account, you may need your National Insurance number, recent payslip, P60, valid UK passport and your UK address.
You will simply need to follow the steps to get your account set up.
Find the software
There is now a range of software or apps that you can use to keep track of your tax records that the government has outlined on their website. According to some government guidance, some tools may be able to directly send your tax VAT information to HMRC, eliminating the need for a self-assessment. The UK government can’t officially endorse any particular product, however.
Advice on using an agent
If you aren’t confident enough or don’t have time to fill in your own taxes, you can have an agent do this for you. The relationship to your agent isn’t important, they could be a professional, friend or family or a volunteer, however they must meet a standard for agents set out by HMRC.
HMRC will perform some checks on your agent to make sure that they are authorised to deal with your tax. Your agent will have to complete a form and send it to HMRC.
Keep on top of your taxes
Exceeding the £85,000 per annum threshold will mean that you will have to register for Making Tax Digital. If your income drops under this threshold for any reason, you must continue to keep your VAT records up to date using the Making Tax Digital system. You will be required to do so unless you de-register as a VAT company.
Visit the government website
To find out more information, visit the government guidance for a more comprehensive overview of Making Tax Digital. You will be able to watch government produced videos explaining how to sign up for Making Tax Digital, what software is compatible and how to keep digital records.
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