Making Tax Digital is a key part of the government’s plans to make it easier and more effective for individuals and businesses to get their tax right and keep on top of their affairs.
From April 1, most VAT-registered businesses above the threshold of £85k will have to keep digital records and submit VAT returns using compatible software (a small percentage of businesses with more complex needs are deferred to October 1 2019).
After a soft-landing period of a year, a further requirement for digital links throughout the VAT return process, or a digital audit trail, will be required until the deadline of March 31 2020.
- Pictured: Peter Rowe, KPMG’s head of tax in Milton Keynes.
As part of the research, 100 regional businesses were asked which statement best described their attitude to Making Tax Digital and the 2019 deadline to comply with the new VAT legislation. The results showed that:
- Almost three quarters (72%) said that it is a good idea but that they need more support;
- Almost a fifth (14%) said that it offers their business no benefit;
- 12% were supportive and ready for the deadline;
- 2% said that it would be damaging to their business
Peter Rowe, head of tax for KPMG in Milton Keynes said: “With just over a month to go until the deadline, it’s worrying to see that almost three quarters of businesses we spoke to felt that they need more support and are still in the process of working out what they need to do.
“This could potentially be both costly and time-consuming, depending on the changes that need to be made.
“Although 98% of VAT registered businesses already file VAT returns electronically, Making Tax Digital will involve significant changes to their existing processes. For example, keeping digital records, maintaining a digital audit trail of all business transactions, and implementing new software to submit their VAT returns digitally.
“Once businesses have made those changes, then they also need to think about the flexibility of their systems and processes to meet potential future requirements under MTD. HMRC are seeking to become the most digitally advanced tax administration in the world. We are likely to see provisions for income tax and corporation tax further down the line.”