As of April 1, 2019, many businesses in the United Kingdom are now obliged to undergo the digital recording and processing of their tax obligations. Vis-à-vis the implementation of the Making Tax Digital for VAT, there might still be taxpayers, accountants, or agents that find it hard to get a good grip of the innovated and digitised version of the tax system.
That can be a serious case since the United Kingdom mostly holds big and fast-rising start-up businesses. In that matter, it’s necessary to get familiar with the MTD for VAT first and foremost – especially those businesses that fall in the scope of the VAT threshold which is presently £85,000.
Thus, to avert misconceptions concerning the MTD for VAT, this article sustains the significant factors of the newly implemented tax system of the United Kingdom. Evidently, the stated factors in the following pages will be a shine of light for the struggling taxpayers, accountants, and agents behind the curtain of MTD for VAT’s operation.
Making Tax Digital for VAT: 2 Phases of Implementation
· 1st Phase:
The first phase of the MTD for VAT’s implementation took place on April 1st, 2019. Businesses exceeding the VAT threshold £85,000 is now mandated to meet their tax duties under the new tax system.
· 2nd Phase:
The HM Revenue and Customs (UK Government’s non-ministerial department accountable for the collection of taxes) will expand the scope of Making Tax Digital in order to comprise sole trades and partnerships with revenue exceeding £10,000. The increase in the scope of MTD will take place in the year 2020.
MTD for VAT: A Stairway for the Tax System’s Remarkable Innovation
The initiation made by the UK government to take a turn to the digital format of the tax system is an absolute sign of modernisation and progress of the UK’s taxation system. Therefore, the implementation of the Making Tax Digital for VAT raises the flag of the possibility of a more efficient, more effective, and better tax system – these are mentioned as the MTD’s objectives.
Making Tax Digital can now be considered as a stairway to a remarkable innovation of the tax system that creates a name in history – not only in the UK’s taxation history but all over the world. The UK government together with the tremendous service of HM Revenue and Customs set a benchmark on the taxation industry.
Bridging Software: Businesses’ Guide to Digital Recording and Filing
One of the most important factors that must be precise to taxpayers, accountants, and agents is that there will be available bridging software which they can use to comply with the digitised tax system. The HM Revenue and Customs is patiently and carefully working with different accounting software developers in order to provide MTD bridging software.
The MTD bridging software will be the key for the businesses to easily link their tax records with HM Revenue and Custom’s system. However, businesses must make sure that the MTD bridging software they’re considering is MTD-compliant.
The Pros of Delivering the MTD into the Platform of UK’s Taxation
· Errors will less likely take place
The MTD bridging software helps in detecting errors on-the-spot. This results in more accurate tax records, and a time-efficient recording and filing process.
· Accessibility and convenience at its finest
Taxpayers will now have their digital tax accounts which offer them a present view of their tax liabilities any time. This means that MTD for VAT will no longer prolong the agony of the taxpayers who want to know how much they owe.
· Better and easier process of recording and filing
The MTD unfolds a better and easier process of recording and filing of tax obligations and that’s something that businesses must be grateful for. It shortens the period of data reporting from annually to quarterly.
· Promotes digital development in the taxation industry
With the UK government’s desire to be one of the most progressive tax administrations in the world, they come up with the great initiation – the enforcement of the Making Tax Digital. With this initiation, the UK now leads in promoting digital development in the industry of taxation.
· Greater chance of monitoring tax records
Since that the MTD for VAT delivers great accessibility and convenience to taxpayers, there is a greater chance for businesses to monitor their tax records particularly the amount they owe.
Kath Ramirez embraced the dream of being a writer since she was in 4th grade. She took it seriously and she’s now a graduate of AB Journalism and a current writer to Australian and United Kingdom-based companies. Aside from writing, Kath also keeps herself busy spending time with her family, cherishing the role of a mom to 3 dogs and a puppy, reading random books, and diving into the world of photography. She’s not even a pro to whatever she’s engaged into right now, but one thing she knows, she’s happy and that’s more than enough.