Government publishes Making Tax Digital for VAT legislation
In March 2018, the government published the Value Added Tax (Amendment) Regulations 2018, which set out the requirements under Making Tax Digital for VAT (MTD for VAT).
The new regulations are set to take effect from 1 April 2019, and will apply to businesses which have a taxable turnover above the VAT registration threshold, which currently sits at £85,000.
Under the government’s MTD regime, taxpayers will ultimately move to a fully digital tax system, and will be required to register, file, pay and update their financial information using a secure online tax account. The government has previously stressed that keeping digital records and making quarterly updates will not be compulsory for taxes other than VAT before April 2020.
From April 2018, HMRC is live piloting MTD for VAT, and a number of UK businesses have been invited to take part. Participating businesses will be able to submit VAT returns using the new digital system, and will have the opportunity to influence how the system works, looks and feels.
The government intends to expand the MTD pilot over the coming months.
Meanwhile, HMRC has also launched an MTD pilot for income tax for self-employed taxpayers. This pilot is open to sole traders with income from only one business, whose current accounting period ends after 5 April 2018.