There are now only a few days before Making Tax Digital (MTD) is introduced for more than a million businesses in the UK on 1 April. The new regulations mean that most businesses above the £85,000 threshold will need to keep their records digitally and submit their VAT return using MTD-compatible software.
Almost 1.2 million firms will be affected by MTD, and, according to HM Revenue & Customs (HMRC), the scheme will make getting tax right easier for businesses. Moreover, research has found that more than 70,000 businesses have already signed up to the new service.
As Financial Secretary to the Treasury Mel Stride commented, we already live in a world where businesses are banking, paying bills and purchasing online, so it is important that the tax system also moves into the 21st Century.
The move to MTD for VAT should lead to increased profits of £6.9 billion for the UK economy as cash flow will be managed more efficiently. Furthermore, as one commentator remarked, when the cash flow is more efficient, firms will get paid faster and have access to capital for growth.
A spokeswoman for HMRC’s Making Tax Digital for Business programme said that there are more than 220 software products for businesses to choose from at a range of prices, including free ones.
HMRC’s advice is that any business affected by MTD should start preparing now, and anyone who needs to send their VAT return to HMRC on or after 1 April should take professional advice.
