What Do Recent Political Events Mean For MTD?
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The UK, by all accounts, is weathering a turbulent period in its history. There’s the lingering question of Brexit: what it is, whether it’ll even go ahead, and how it may impact the nation’s finances. But equally, Making Tax Digital (MTD) – due to begin with MTD for VAT in April 2019 – is inbound too.
So another question may be what, if any, delays are coming to the MTD roll-out? Tens of thousands of businesses and taxpayers need an answer, in order to prepare to the best of their ability.
That answer is here. And it’s better than you may think.
Brexit and MTD are piling pressure on the government. One has impacted the other – more resources are being driven to Brexit preparations, leaving the digital tax system (still in its infancy) lacking the necessary backing in order to work effectively.
Real-time tax codes, for example, were due an overhaul. HMRC wants to change the code for every taxpayer who gains a new income status during the tax year, without a Self Assessment. That was also planned for capital gains declarations, but both have been pushed back. Our break from the EU demands more manpower and hours – MTD just isn’t as critical.
Further promises, such as smoothing out applications for new tax credit claims, have fallen behind too. But that’s the extent of the changes – in many other respects, MTD for VAT is categorically not going to be delayed. After all, the pilot for the online VAT service has been live since October 2018. The system has already been slowed and changed numerous times, missing the original April 2018 launch. HMRC seem keen to get on with MTD and standardise it.
You may be aware that MTD has a staggered implementation timeline. The first phase, due at the start of the 2019/20 tax year, is only for VAT collection. Businesses or individuals who earn over the threshold (at present, £85,000 per annum) must adopt this system. The rest don’t have to worry about MTD at all, for now.
We’ve written an article on compliance and how to get ready for it. Read the details before moving on with your MTD preparations. Remember that any business can technically register for VAT – it’s merely those with £85,000-plus turnover that are obliged to do so by law. So if you volunteer to charge VAT, pay HMRC any due VAT, submit VAT Returns, and keep VAT records and an account, check out the MTD rules prior to their introduction.
It’s as yet uncertain what happens to more advanced MTD features in the 2020/21 tax year. Income Tax and Corporation Tax may take longer to join the digital framework (MTD for these is not expected before April 2020). But we do know that MTD for VAT is going ahead as planned. And it’s a good time to remind you that certain software, more than others, has been made for those duties.
Liquid’s VAT Filer has HMRC’s approval. We’ve built our tools to be completely in line with their digitalisation of tax. Whatever happens next, trust us to be on the right side of it. If you have any questions at all, speak to us today.