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The Chartered Institute of Taxation (CIOT) has welcomed the legal status given to the Making Tax Digital for VAT (MTD for VAT) ‘soft landing’ period, which is intended to help taxpayers who may find it difficult to comply with the IT demands associated with the initiative.
The MTD for VAT regulations are set to take effect from 1 April 2019, and will apply to VAT-registered businesses with a taxable turnover above the VAT registration threshold (currently £85,000).
HMRC recently published a VAT Notice which states that the Revenue will allow a ‘soft landing’ period of time for firms to ensure they have ‘digital links between all parts of their functional compatible software’ in place.
However, for the first year of mandation, businesses will not be required to create digital links between MTD for VAT software programs.
Whilst the CIOT welcomed the news, it has warned that the soft landing period will not affect how the final VAT return is filed. This must be submitted through Application Programming Interface (API)-enabled software, rather than HMRC’s current portal.
Commenting on the matter, John Cullinane, CIOT Tax Policy Director, said: ‘Robust systems will need to be implemented by HMRC to ensure that this soft landing is fairly and consistently applied, with the least amount of aggravation for businesses, their agents, and HMRC.’
MTD represents a fundamental change to the way businesses keep their records. As your accountants, we can advise you in regard to your MTD requirements. Contact us if you need advice
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