The introduction of MTD (Making Tax Digital) for VAT will affect businesses with a turnover above the current VAT threshold of £85,000. These businesses will be required to keep digital records and provide regular digital updates to HMRC for VAT purposes using MTD for VAT. There will be some additional preparation time for a small number of businesses with complex requirements.
HMRC has launched a letter writing campaign to remind businesses that the way they keep VAT records and submit their VAT returns is changing. The letters are being sent to businesses who will be included in the new Making Tax Digital (MTD) for VAT, which comes into effect from 1 April 2019.
20,000 letters was sent earlier this month with a further 180,000 letters sent last week. HMRC is planning to send letters to all affected businesses by the end of November, although this date may change. We are told that there are two versions being used to enable HMRC to monitor their impact. Both have the same core message including advice on how to prepare your business for the change but are written in slightly different styles.
MTD will initially be for VAT purposes only. From April 2020 MTD for Corporation and Income Tax commences. The date and details are still to be confirmed by HMRC but we do know Sole Traders, partnerships, landlords and trading companies will be required to keep digital records and submit quarterly updates for both income and corporation tax purposes.