HMRC firmly believe that Making Tax Digital will have a significant positive impact on businesses by helping them manage their tax affairs more efficiently in real time. It is hoped that by transforming tax administration, so that it is more effective, more efficient and easier to navigate, more time can be spent developing and growing the business.
From 1 April 2019, around 1 million businesses registered for VAT with a taxable turnover above £85,000 will need to keep their VAT records digitally and file their returns using MTD-compatible software. However, there is still much concern within the tax and accountancy professions that businesses are simply not preparing for MTD faster enough – those who need to make the transition have only a few months left to get ready.
HMRC have recently opened a pilot for around half a million businesses whose affairs are up to date and straightforward, and this will be extended to most other business types over the coming months. Eligible businesses and agents should not leave preparations to the last minute and are being encouraged to join the pilot as soon as they can.