HM Revenue and Customs (HMRC) has published more information on Making Tax Digital (MTD) in the run up to the start of the mandatory MTD VAT service from April 2019.
As part of MTD, businesses registered for VAT with a taxable turnover above the VAT registration threshold of £85,000 will need to keep VAT records digitally and file their VAT returns using MTD compatible software. This will start from their first VAT period starting on or after 1 April 2019.
Businesses with a taxable turnover below the VAT threshold will not have to operate MTD, but can still choose to do so voluntarily.
Who needs to follow the MTD rules and from when?
The digital records businesses must keep, and a series of HMRC directions that relax these requirements in certain circumstances (such as where a mixed rate supply is made, where a third party agent makes or receives supplies on behalf of a business, and where a business uses a special VAT scheme such as a retail scheme or the Flat Rate Scheme) have been published by HMRC.
Businesses above the VAT threshold are not required to use MTD for their VAT returns until April 2019. Businesses should start to prepare now by ensuring they are keeping their records digitally and in accordance with the HMRC rules.
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