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Making Tax Digital (MTD)

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What is Making Tax Digital?

Making Tax Digital (MTD) is a part of HMRC’s long term strategy to make the tax affairs of individuals, businesses and other organisations simpler, compliant, easier and are in good order.

After much public review and scrutiny, HMRC have developed the Making Tax Digital scheme to address the tax gap between expected revenues and actual collected revenues. Most of these differences for taxpayers are usually honest mistakes but a major contributing factor to this is errors or mistakes in their record keeping.

Making Tax Digital therefore requires individuals, businesses and organisations to keep digital records using relevant bookkeeping or accounting software and any supporting or written spreadsheets. HMRC believes this will reduce errors and address the tax shortfall.

When does MTD come into effect?

Making Tax Digital is currently already in effect to some extent but has not yet been fully rolled out yet. At present, limited companies and limited liability partnerships are required to keep digital financial records and as of April 2019, any business that submits either monthly or quarterly VAT returns must submit digital returns via the MTD scheme.

Further expansion of the programme is expected in the few coming years on:

Will it affect you or your organisation?

If you currently do VAT returns, you will need to be registered for Making Tax Digital.

If you do income tax returns, you can currently opt into the scheme voluntarily before the compulsory deadline to get used to the implementation as required by HMRC.

If you or your business do not fall within the criteria for digital record keeping and submission requirements at present, you may notice the tax system is getting progressively more digital.

HMRC often now interact with taxpayers and entities through both your personal and business tax accounts via HMRC’s Government Gateway portal.

How can we help?

At RFBS Accounting, we have a team of dedicated specialists for Making Tax Digital who can advise you of the steps you need to take to comply with MTD scheme. Don’t hesitate to get in touch with one of our advisers.

Our help and advice can include

  • What is Making Tax Digital?
  • When does each part of Making Tax Digital come into effect?
  • The requirements of and implementation of Making Tax Digital
  • Who is currently affected by Making Tax Digital?
  • Making Tax Digital for those keeping paper records or spreadsheets
  • Making Tax Digital for those using bookkeeping or accounting software
  • Accounting software solutions and packages for Making Tax Digital
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Contacted RFBS to carry out my self assessment tax return. As a none UK resident I needed someone who understood my UK tax liabilities and Ryan the Director certainly did. The promptness and accuracy of all the communication was excellent.