Making Tax Digital is a key part of the government’s plans to make it easier for businesses like yours to get their tax right and keep on top of their affairs by providing tax records digitally, saving on both business time and resources.
Initially VAT-registered businesses with a taxable turnover above the VAT threshold (£85,000) were required to use the Making Tax Digital service effective from 1 April 2019.
However, HMRC have now announced a 6 month deferment for certain businesses who now won’t be required to Make Tax Digital until 1st October 2019.
This exception is for a small minority of businesses with more complex requirements and whose business affairs aren’t as straightforward as others – as a result these businesses have now been deferred until 1 October 2019.
Which businesses are affected by this Making Tax Digital change?
According to HMRC this deferment will only affect around 3.5% of mandated businesses which fall into these categories:
- ‘Not for profit’ organisations that are not set up as a company
- VAT divisions
- VAT groups
- Those public sector entities required to provide additional information on their VAT return (Government departments, NHS Trusts)
- Local authorities
- Public corporations
- Traders based overseas
- Those required to make payments on account
- Annual accounting scheme users
To see how this may affect your business, view the HMRC Making Tax Digital for VAT timeline below.
|October 2018||Open to sole traders and companies (except those which are part of a VAT group or VAT Division) provided they are up to date with their VAT. Those who trade with the EU, are based overseas, submit annually, make payments on account, use the VAT Flat Rate Scheme, and those newly registered for VAT that have not previously submitted a VAT return, are unable to join at this point. Those customers with a default surcharge within the last 24 months will be able to join the pilot by the end of October 2018.|
|Late 2018||Private testing begins with partnerships, those customers that trade with the EU, and users of the Flat Rate Scheme.|
|Late 2018 / early 2019||Open to other sole traders and companies who are not up to date with their VAT and businesses newly registered for VAT that have not previously submitted a VAT return.|
|Early 2019||Open to partnerships and those customers that trade with the EU.|
|Spring 2019||Pilot open for Making Tax Digital customers that have been deferred.|
|April 2019||Making Tax Digital mandated for all customers (except those that have been deferred).|
|October 2019||Making Tax Digital mandated for customers that have been deferred. The 6-month deferral applies to customers who fall into one of the following categories: trusts, ‘not for profit’ organisations that are not set up as a company, VAT divisions, VAT groups, those public sector entities required to provide additional information on their VAT return (Government departments, NHS Trusts), local authorities, public corporations, traders based overseas, those required to make payments on account and annual accounting scheme users. The deferral will apply to around 3.5% of mandated customers.|
If you need any advice on personal or business tax, our expert team can help you – why not call us now on 01244 400315 for an informal chat without obligation or email [email protected].