Making Tax Digital

Posted by - March 10, 2020 10:02 am Making Tax Digital update

The end of soft landing period

Making Tax Digital (MTD) was a concept first announced by HM Revenue & Customs (HMRC) in the March 2015 Budget. At that time, the government set out with a vision for a transformed tax system and the end of the tax return.

MTD first went live from 1 April 2019 and is applicable for all VAT registered businesses with taxable turnover over £85k (the current VAT registration threshold), whereby VAT Returns are now required to be submitted via a software package only. 

Introduction period

HMRC allowed time during the “soft landing period” between 1 April 2019 to 31 March 2020, for businesses to establish digital links between their accounting data and the MTD compatible software.  There were no penalties or interest enforced by HMRC during this period.

What’s happening now?

The end of the soft landing period is now fast approaching, and to avoid any penalties you must ensure:

  • You are now using a compatible MTD software to submit your VAT returns to HMRC
  • The software you use has digital links for any transfer of data between software programs

It is possible to contact HMRC and discuss any specific issues that you are experiencing in enabling digital links, and it might be possible to extend your soft landing period but this will be on a case by case basis.

Penalties

The main reasons for penalties for non-compliance under MTD are:

  • Failure to keep the required digital records
  • No digital links between software programs
  • Late filing of VAT returns
  • Late payment of VAT

The existing penalties under the current VAT regime will be adopted for MTD non-compliance.

Assistance by MFW

For those businesses who have not acted already in ensuring MTD compliance, McCabe Ford Williams will be happy to guide you through the MTD process and provide you with as little or as much assistance as required.

We will be able to help advise, and recommend to you an accounting solution to best suit your needs and business. 

For help with MTD and other tax issues please contact your local MFW office.