Making Tax Digital

Making Tax Digital (“MTD”) is the most fundamental change to the administration of the UK tax system since the introduction of self-assessment. As implementation of the project is rolled out and the legislation is developed and enacted, the Institute will support its members. These pages will be updated with news, developments and resources to help you get ready for this fundamental change. MTD commences with VAT from April 2019. The project is expected to be rolled out to other taxes, starting with income tax.

Latest news

Tax

In an unexpected move, last week HMRC announced that it is opening up a new process which, on application and acceptance by HMRC, will allow some businesses longer to meet the digital links requirement under Making Tax Digital for VAT, once the one year soft landing period from the original mandation date for MTD ends (either from 1 April 2020 or 1 October 2020). HMRC have also updated the relevant VAT notice. “For periods starting on or after 1 April 2019, most VAT-registered businesses with turnover above the threshold have been required to keep their records digitally and send their VAT returns to HMRC direct from the underlying data in those digital records.  In recognition of the fact that some businesses would need more time to digitise the links between their internal systems to fully meet the requirements of Making Tax Digital (MTD), we allowed a 1 year ‘soft-landing’ period from their original mandation date for these digital links to be in place.   Today we opened the process for customers to apply for additional time, if needed, to put digital links in place in order to comply with the requirements of MTD. This additional time will be provided for businesses with complex or legacy IT systems, who are unable to comply with MTD digital links requirements by the end of the initial soft-landing period. Businesses need to ensure that by the end of their soft-landing period their systems are digitally linked where any data is transferred or exchanged. Through our engagement with stakeholders we are aware that some businesses, with complex or legacy IT systems, may require a longer period to put digital links in place across their MTD software to meet their legal MTD for VAT requirements. Therefore, we have opened a process for customers to apply for additional time. The criteria for making an application and how to apply are set out in the VAT Notice 700/22, section 4.2.1.3 - www.gov.uk/government/publications/vat-notice-70022-making-tax-digital-for-vat.  Applications must be received by HMRC by the end of a business’ soft-landing period.” END OF HMRC COMMUNICATION

Oct 21, 2019
Tax

HMRC has advised that scheduled maintenance is taking place to the Making Tax Digital (“MTD”) VAT service from Saturday 21 September at 16:00 until Monday 23 September at 16:00, during which time the MTD service for VAT will be closed. During this period, taxpayers and their agents will be unable to: Sign up for Making Tax Digital for VAT, Create an Agent services account (although all other Agent services will be available), Submit VAT returns, View previous submissions and payment details, Set up new or cancel and amend existing direct debits, Review and update any business details, Access the Business Tax Account to view or change details.   Further details can be found on the VAT and ITSA service availability pages:   VAT - https://www.gov.uk/government/publications/making-tax-digital-for-vat-service-availability-and-issues/making-tax-digital-for-vat-service-availability-and-issues ITSA - https://www.gov.uk/government/publications/use-software-to-send-income-tax-updates-service-availability-and-issues/use-software-to-send-income-tax-updates-service-availability-and-issues

Sep 16, 2019
Tax UK

HMRC recently sent the below update on Making Tax Digital (“MTD”) which sets out its approach to enforcing compliance in the first year of MTD. Update from HMRC “The government has confirmed a light touch approach to penalties in the first year of implementation of MTD VAT. Where businesses are doing their best to comply, no filing or record keeping penalties will be issued.  The department’s main priority is to support taxpayers to transition to MTD smoothly, so it will not penalise businesses, instead we will send them a letter encouraging them to join without further delay [where businesses failed to sign up in time for their first MTD filing deadline].  We are trialling two different approaches based on compliance and behavioral insight. For each approach, there are two versions of the letter – one includes a disclaimer for businesses where the information we hold suggests their taxable turnover may be below the VAT registration threshold.    Following feedback on the letter issued to monthly filers, we have amended the letter to make the disclaimer more prominent – it is now at the outset.  Sanctions will remain possible in cases of deliberate non-compliance, and in order to safeguard VAT revenue.”  

Sep 09, 2019