Making Tax Digital moves again
The government has extended the timetable for the introduction of Making Tax Digital (MTD) after listening to widespread concerns.
Under the new timetable, MTD will initially only be introduced for VAT obligations, with a start date of 1 April 2019. And even then, you will not be required to use MTD if your turnover is below the VAT threshold.
With VAT, the move to MTD should be less problematic than it will be for other taxes. VAT returns already have to be filed online, and businesses will not initially need to provide information to HM Revenue & Customs (HMRC) more regularly than they currently do. The move to MTD will not affect the use of retail schemes or the flat rate scheme, and it will still be possible to file only one annual return where the annual accounting scheme is used.
Under MTD, however, it will be necessary to use third party software rather than HMRC’s software. The software will need to keep and preserve your VAT records digitally for up to six years. So you will no longer be able to keep manual VAT records. The use of spreadsheets should still be possible, but this is likely to involve combining the spreadsheets with your MTD software.
The government does not intend to widen the scope of MTD beyond VAT until the system has been shown to work, and not before April 2020 at the earliest.