Making Tax Digital has been described as the biggest shake-up to the taxation system since Self-Assessment was introduced more than 20 years ago. The new system starts with VAT and requires businesses to keep records in a digital format and file their VAT returns using functional compatible software.
Making Tax Digital will extend to Income Tax and Corporation Tax, but fortunately, not before April 2020, so businesses still have some time to consult expert financial advisors in this area. Making Tax Digital for VAT became effective for VAT registered businesses with a taxable turnover above £85,000 from 1 April 2019. The filing position for VAT registered businesses with a taxable turnover below £85,000 will remain unchanged for the time being with the expectation that such businesses will be brought under the new requirements from April 2020 at the earliest.
A new report by a House of Lords Committee found HMRC has failed to adequately support small businesses with the introduction of Making Tax Digital, and in the lead up to 1 April 2019, the government was urged to postpone its plans over fears that farmers are not well-prepared for the changes.
There have been reports of farm businesses going to desperate lengths to get access to digital connections in order to try to comply. The patchy digital infrastructure across many UK rural areas means farmers are still struggling to access stable and secure internet, which has only added to the frustration. Many farmers and rural businesses have had to attempt a quantum leap in switching from manual calculation to digital software.
“And, said Lindsay Beeston, Partner at Cheshire Accountants Afford Bond: “of the farmers and small businesses who are online, many are struggling to get to grips with the leading software solutions, finding them difficult to use at best.
If your business needs help, or you would like to speak to one of our expert Making Tax Digital advisors, please complete the Contact Us form here on our website.