MTD for VAT takes effect for over one million businesses
On 1 April, the government?s Making Tax Digital for VAT (MTD for VAT) initiative came into effect.
Businesses which have a taxable turnover above the VAT registration threshold (currently ?85,000) are now required to comply with MTD for VAT. As part of the initiative, firms must keep some records digitally, using ?functional compatible software?. This means a ?software program or set of compatible software programs which can connect to HMRC systems via an Application Programming Interface (API)?.
Commenting on the scheme, Mel Stride, Financial Secretary to the Treasury, said: ?Delivering MTD for VAT is the first step toward our ambition to create one of the most digitally advanced tax authorities in the world.
?The rules . . . will give businesses more control over their finances, allowing them to spend their time focusing on innovation, growth and the creation of jobs.?
However, the Association of Taxation Technicians (ATT) and the Chartered Institute of Taxation (CIOT) have warned firms ?not to sign up too early? for MTD for VAT. They state that, although 1 April 2019 is the start date for maintaining digital accounting records, it is not the deadline to sign up for MTD for VAT.
Adrian Rudd, Chair of the joint ATT/CIOT Digitalisation and Agent Strategy Working Group, said: ?More than 70,000 businesses are now signed up to MTD, the majority of which have done this themselves. We hope they have not jumped the gun, having misunderstood the requirements.?