Sean Wiegand clarifies when Making Tax Digital (MTD) becomes compulsory

Sean Wiegand Accountant EssexPosted by Sean Wiegand:

Following my article of 13 July providing an update to the Making Tax Digital (MTD) timetable announced by HMRC, I would like to clarify the current position with regards to when MTD becomes compulsory.

For VAT purposes only, businesses that have a turnover in excess of the VAT threshold (currently £85,000) will need to keep records digitally from April 2019 and submit their VAT Returns using a MTD compliant platform. Businesses that are required to submit under MTD will no longer be able to use the government gateway as is available today to submit their VAT Returns because we will see a new MTD gateway for these submissions.

From April 2020 it is expected that businesses that have a turnover in excess of the VAT threshold will need to update HMRC quarterly for Income Tax or Corporation Tax purposes. HMRC have stated that this is the earliest mandatory date but as they have already extended by 2 years for Income Tax purposes we are working towards an April 2020 commencement date.

Currently HMRC have stated that businesses below the VAT threshold will be able to submit on a voluntary basis from the dates above. I am however sceptical how long this will remain voluntary as HMRC will need to run both the new MTD platform and the old Government Gateway for those businesses who decide not to submit under MTD.

I assume that the reason HMRC have allowed voluntary MTD submissions for businesses with a turnover less than the VAT threshold is because they believe that Tax payers will take up this offer to get early access to Tax estimates. I am not so sure this is will be the reality and surely HMRC need to offer a financial incentive as they did in the past to get Tax payers to sign up to the flat rate scheme and submit their payroll electronically.

For the purposes of deciding if you have breached the turnover threshold for MTD you need to aggregate all MTD relevant turnover which includes business turnover and rental income. For example if you have a sole trade business with turnover of £70,000 and rental income from two properties totalling £18,000 then MTD will be mandatory from April 2020 as the total turnover is £88,000.

We will continue to run our Lunchtime Learning Sessions during 2018 to ensure our clients are as well prepared as possible for MTD.

If you have any questions regarding MTD then please contact Sean Wiegand on 01376 326266.

August 2017


The views expressed in this article are the personal views of the Author and other professionals may express different views. They may not be the views of Lambert Chapman LLP. The material in the article cannot and should not be considered as exhaustive. Professional advice should be sought in connection with any of the issues contained in the article and the implementation of any actions.

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