What does Making Tax Digital mean for our Microsoft Customers?
Digital transformation is the buzzword surrounding just about all industries at the moment. If you don’t have a centralised data system or a core digital structure, chances are you will soon and this is no different for HMRC. The government is making changes to modernise all aspects of financial processes, starting with the way both individuals and businesses pay taxes, moving everything to an entirely digital, standardised process. This is part of the HMRC’s aim to become one of the most digitally advanced tax administrations in the world.
The first step in HMRC’s plan is the initiative they’ve called Making Taxes Digital (MTD) which requires all businesses over the threshold of £85,000 to meet a set of VAT obligations, including the way they record, monitor and pay taxes. This will automate the process, making it easier and more efficient for users, allowing for fewer mistakes and ultimately allowing HMRC to collect more information.
VAT-registered businesses with a taxable turnover above the VAT threshold are required to use the Making Tax Digital service to keep records digitally and use software to submit their VAT returns from 1 April 2019.
HMRC has stated that they will not be provided an exclusive platform on which they'll expect people to use to comply with these changes. Instead, businesses will be using compliant finance or ERP software to connect their taxes directly to HMRC.
Making Tax Digital requires all VAT registered businesses to:
- Keep digital records for VAT purposes
- Provide VAT return information to HMRC with Making Tax Digital compatible software and not through the current HMRC portal
HMRC will not continue to roll out other returns policies before VAT has been proven successful and is embedded in common tax procedures.