MTD Brochure

MAKING TAX DIGITAL
INFORMATION
BOOKLET

Making Tax Digital - April 2019 A Useful Flowchart
What is it?
Has the VAT Registered business had a
Making Tax Digital (MTD) From April 2019, businesses turnover of more than £85,000 in the last 12
is a government initaitive will be mandated to use the
aimed to make it easier for Making Tax Digital system months on a rolling 12 month period?
you to manage and pay
for VAT obligations. YES NO
your taxes.
• Provide VAT information via Are there any YES Business is exempt
• 2015 Budget had MTD compatible software. exemptions available YES Unless they have
announced a path for made an election
digitising taxation in the UK. • VAT Returns are to be filed for: not to be exempt.
directly from software for • Religious reasons
• Along the way there were API spreadsheets. • Insolvency. NO
delays but Julu 2017 dates
were confirmed. • Filing of VAT Returns will no procedures. MTD for VAT does
longer be possibel under • Disability. not apply.
• VAT registered businesses the exisiting Government • Remoteness of
are to be affected from April Gateway Portal.
2019. location.
• A new electronic
• April 2020 will affect all account will be set up for all NO
other businesses including businesses.
Landlords.
• VAT registered businesses
• The reason behind it is that with turnover of less than
HMRC wants to modernise £85,000 are automatically
the current tax system to exempt.
close the tax gap.
• It is not clear how VAT
• HMRC believe that by keep- Returns will be filed by
ing digital records, errors businesses with a turnover
will reduce. of less than £85,000.

• As a minimum you will MTD for VAT applies.
complete a quarterly return,
pluse a 5th one with any
adjustments.

• Cloud Accounting and the
use of technology will make
this process easier.

The Electronic The The Four Foundations of
Account Process Making Tax Digital

The following information HMRC’s View: Utilised information - Businesses will not have to
will be kept digitally: provide HMRC with information they already acquire, or
“Software will with information they can obtain from elsewhere, such
• Name. address and VAT calculate and prepare as banks and building societies. Furthermore, digital
number of the business. the VAT Return from your accounts will allow individuals to view information that
digital records. It will then HMRC retains at any time.
• Details of any VAT show the return to you and
scheme. ask you to declare that it Tax in real time - To alleviate errors, HMRC will collect
is correct and confirm that and process information that affects tax as close to
• Supplies made in the you to submit it to HMRC. real time as possible, allowing individuals to know how
period - date, value and Once you have submitted much tax they need to pay.
rate of VAT charged. your return you will receive
confirmation through your A single financial account - By 2020, all businesses and
• Supplies recieved in the software that is has been individuals will be able to view in their digital account a
period - date, value and broad financial picture, emulating the method of online
inout VAT claimed. received”. banking.

• Outputs - total tax out, Digital interaction - Interaction with HMRC by
output for tax acqui- customers and their agents will be able to occur
sitions under EU and at a time that suits them. The digital account they
reverse charge. already possess will present to them an increasingly
individualised overview of their tax affairs, as well as
• Inputd - total input advice and support through secure messaging.
tax, total input tax for
acquisitions from EU.

• Any adjustments such as
partial exemptions.

• HMRC will also
communicate digitallu
to tax payers.

Beyond Your Next
2019 Steps

• Every business and
landlord will use the
income and expense
category specified by
HMRC, and will use the
Electronic Account to
submit data.

• HMRC will phase out
the current portal for all
taxes.

• Four quarterly returns is
expected and a fifth one
with any adjustments.

• A final one replacing
the tax returns called
year-end declaration.
This may come with pre
populated data that
HMRC will have already.

• At the moment, the
focus is on businesses,
and exact details will
not be confirmed until
secondary legislation for
other taxes is passed.