Making Tax Digital and Paprika
In July 2017, the Government released its latest plans for Making Tax Digital (MTD) for Business. After initial concerns about the pace and scale of change to the tax system, the Government has now amended its roll-out of MTD to ensure that businesses have plenty of time to adapt.
The first planned change will take effect from April 2019, whereby businesses above the VAT threshold will be mandated to keep their records digitally and provide quarterly updates to HMRC for their VAT. According to the GOV.UK website, seeing as VAT has been online since 2010 and over 98% of VAT registered businesses already file electronic returns, “no business will need to provide information to HMRC under Making Tax Digital for Business more regularly than they do now”.
Although there are plans to extend digital record keeping for tax purposes, the Government has committed that it “will not widen the scope of Making Tax Digital for Business beyond VAT before the system has been shown to work well, and not before April 2020”.
The MTD initiative aims to make it easier for individuals and businesses to get their tax right. Avoidable taxpayer mistakes cost the Exchequer 8 billion a year. The proposed modern tax system, based on digital technology, hopes to reduce both the number of avoidable errors and the cost which ensues when HMRC are forced to intervene. With millions of businesses already banking, paying bills, and interacting online – a digital tax system is seen as the next logical step.
We are currently working in partnership with HMRC to ensure the transition onto the new digital tax system is a smooth one for all Paprika clients. As registered software developers, we’ve enrolled on the MTD developer programme and the project is underway. Paprika is fully committed to supporting all our clients in this matter and will continue to keep you updated to help clarify exactly what MTD means for you and your business.
To read a comprehensive overview of the MTD changes, follow this link to the GOV.UK website.