There’s less than a month to go until the first round of VAT-registered businesses enter into the Government’s Making Tax Digital (MTD) regime.
All VAT-registered businesses turning over more than £85,000 will be mandated into MTD by 1 October 2019, with the majority of firms adopting the scheme by 1 June 2019.
Companies with a VAT return quarter ending on 30 June 2019 will be the first to begin operating under the regime on 1 April 2019.
A month later, VAT-registered businesses with a return quarter ending on 30 April 2019 will be the second batch of businesses to go through MTD. Finally, on 1 June 2019, those with a VAT return quarter ending 31 May 2019 will adopt MTD.
Despite the fact that MTD is intended to modernise the tax system and make it easier for businesses and eventually individuals, to record and report their tax accurately, its introduction hasn’t been welcomed by many. At the beginning of this year, leading tax bodies joined forces with the House of Lords in a bid to delay the rollout.
While it looks like MTD is set to go ahead, a six-month deferral period for MTD will apply to around 40,000 VAT-registered businesses with more complex accounts, such as not-for-profit organisations and local authorities.
Although submitting VAT returns online every quarter and at year-end is nothing new, using HMRC-approved software is. Around 150 software providers or products have been given the green light by the Revenue so far.
Software provider, Advanced has claimed that more needs to be done to get the UK’s 2.67 million VAT-registered businesses and their agents ready for MTD however. It polled more than 1,000 professionals involved with VAT-registered businesses and found that 57% were prepared, while 35% did not know whether or not they will be ready for MTD.
Jon Wrennall, chief technology officer at Advanced, commented:
“The Government is right to implement initiatives that mean organisations need to become more digital, but our research suggests that not enough support is being given to help them prepare.”
Won’t be ready in time?
If you’re worried that your business won’t be ready in time, please get in touch with PKB. We have software that can enable our clients to continue to file VAT returns via a spreadsheet for the next 12 months, while still being compliant with the new MTD rules. This gives you the extra time you need to switch to the appropriate software and also saves you the additional costs this involves in the meantime.
If you would like further information about MTD and how it’s likely to affect your business, please head over to our Making Tax Digital page. We’ve also answered all your questions and concerns about this topic over in our blog.