Introduction to Making Tax Digital
Making Tax Digital is a key part of the government’s plans to make it easier for individuals and businesses to get their tax right and keep on top of their affairs – meaning the end of the annual tax return for millions.
Every individual and business now has access to their own personalised digital tax account and these are being regularly expanded and improved. HMRC’s ambition is to become one of the most digitally advanced tax administrations in the world, modernising the tax system to make it more effective, more efficient and easier for customers to comply.
There is widespread agreement that Making Tax Digital for Business is the right approach for the future. However a number of concerns about the pace and scale of change have been raised. As a result the government has announced that the roll out for Making Tax Digital for Business has been amended to ensure businesses have plenty of time to adapt to the changes.
Businesses will not now be mandated to use the Making Tax Digital for Business system until April 2019 and then only to meet their VAT obligations. This will apply to businesses who have a turnover above the VAT threshold – the smallest businesses will not be required to use the system, although they can choose to do so voluntarily.
The government remains committed to ensuring we can deliver a modern digital tax system for all businesses and their agents, supporting them to get their tax right and reducing the amount of tax lost through avoidable error.
The foundations for Making Tax Digital are:
Tax Simplified – You will no longer have to provide HMRC with information which they can obtain from your employers, banks, building societies and other Government departments. This will speed up collecting tax information.
Making Tax Digital for Businesses – Businesses will no longer have to wait until the end of the year to know how much tax they’re due to pay. This will reduce tax-due and repayments owed from accruing, improving cash flow management at the same time.
Making Tax Digital for Individual Taxpayers – From April 2016, SME’s have access to their digital tax accounts. HMRC will send prompts and share advice through webchat and secure messaging from within each digital tax account.
Tax in One Place – By 2020 you will be able to see all of your tax information in one place – including all liabilities and entitlements – just like internet banking.
Making Tax Digital Illustrative Case Studies:
Making Tax Digital Myth-Buster: