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MTDfB is the government’s vision to have one of the most digitally advanced tax systems in the World. In their words “to improve efficiency and to reduce error”. By forcing businesses to store and share information digitally, HMRC will have quicker access to data and clear audit trails from source documents to filed returns.
The first step in the MTDfB process focuses on the way VAT return information is stored, processed and communicated and will impact VAT registered business with a taxable turnover greater than the VAT registration threshold (currently £85,000).
From April 2019 “businesses must be capable of keeping and maintaining the records specified in the regulations, preparing their VAT returns using the information maintained in those digital records and communicating with HMRC digitally via an Application Programming Interface (API) platform” (HMRC VAT notice 700/22).
Visually, this means the following:
In general, the requirements will place different pressures on businesses depending on how complex their VAT position is. For simple VAT structures there are software solutions available that will quickly make you compliant.
Sadly, for more complex VAT profiles and group companies’ life may not be so straight forward.
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[caption id="attachment_102142" align="aligncenter" width="203"] Rosy Hughes, Head of Private Client Tax[/caption] Reaction to Covid-19 self-employed provision - Rosy Hughes, Head of Private Client...