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The Government's plan to make tax digital will affect every individual taxpayer and business by 2020. Some changes have already begun, and we recommend you get engaged as early as possible to get used to the new system.
In essence, 'Making Tax Digital' is designed to get all tax records online and up to date, so they are accessible to both taxpayers and HMRC. Quarterly submissions of accounts will then be made to HMRC to give a snapshot of business income and expenses.
Businesses with a turnover above the VAT threshold will be mandated to use making tax digital for business (MTDfB) system from April 2019 to meet their VAT obligations. Businesses with a turnover below the VAT threshold will not be required to use MTDfB from April 2019 but can choose to do so.
The scope of MTDfB will not be widened before the system has been shown to work well and not before April 2020 at the earliest.
Whether you are an individual, a partnership, an incorporated company, or a family trust, Larking Gowen offers a full service from looking after your digital accounts to giving advice on what steps to take to get in line with the new system.
The services and information we provide includes the following:
East Anglian Widgets Ltd – a trading company
Currently the company files quarterly VAT returns and an annual corporation tax return. It operates a payroll scheme for its employees.
Making tax digital will mean that from 1 April 2019 the company will need to maintain details of its VAT transactions on an app or software which can make quarterly submissions to HMRC.
By 2020 the company will need to maintain all of its business records on an app or software. Its digital tax account will contain all of its corporation tax, VAT, and payroll records in one place.
The company will have the option to pay all of its taxes (corporation tax, VAT etc) in smaller more regular payments. It will also be possible to offset a refund of one type of tax against another.
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