Keep Calm And Carry On: How To Keep Your Finances Stable Amidst HMRC Pressures

Two major forces – Brexit and Making Tax Digital (MTD) – are bearing down on the government together. It looks as if HMRC may struggle to cope in the long term.

We’ve already spoken about Brexit’s implications for the digital tax system, and what they might mean for the roll-out beyond 2020. So how can you stay confident? What can you do, specifically, to avoid any turbulence with your tax submissions?

Counting the cost of instability

In our previous blog post, we mentioned HMRC’s insistence that MTD for VAT is going ahead. To recap, this means that any VAT-registered business with a taxable turnover greater than £85,000 per annum must, by the 6^th April 2019, start keeping digital VAT records and send their VAT Returns using MTD-compatible software. MTD for Income and Corporation Tax won’t be introduced until 2020/21 at the earliest.

Yet Brexit is piling pressure on every government department. Customs staff, visa administrators, finance experts… Many of them are in short supply. Here’s a snapshot of the problem:

• HMRC needed 5,000 extra workers to manage the Brexit process. As of October last year, they only had 2,300. This is despite taking more people off projects like MTD.
• 140,000 businesses could face new VAT requirements when selling overseas in the event of a no-deal Brexit. This will be their first experience of VAT, which may come as a shock to the majority of them and place further stress on HMRC’s IT systems.
• 40% of VAT-registered businesses are said to be unaware of the MTD changes. Government information has been limited as other priorities have taken its place. If people don’t know what they’re liable for, that could result in mistakes and missed deadlines.

At the very least, the immediate MTD infrastructure isn’t looking too solid for the 1.5 million taxpayers over the VAT threshold. At the most extreme end of the scale, we could see a large proportion of them penalised for not being able to submit effectively, or being unaware about that responsibility in the first instance.

How to prepare effectively

The best way to prepare is by using software that has already been verified by HMRC for digital tax purposes. Also, a good knowledge resource is essential. Liquid fill each of those quotas – we’ll keep you updated on the government’s position, and we’ve built a platform (our VAT Filer) to input and submit details as you scale up.

A seamless conduit to HMRC will help you join the Making Tax Digital system whilst Brexit rages on behind it. Discover more about our Filer today.