The government have published the first detailed drafts of the new Making Tax Digital regulations. The draft rules give sole traders and business partnerships an idea of what tax information they need to store digitally and what they will be required to do for their quarterly tax returns.
Filing Income Tax & VAT Records Digitally
It is important for all business owners to check out the new draft regulations to ensure that their tax record systems in place will be compatible with the new regulations, or whether they need an overhaul. The new rules that have been published mainly consist of how businesses will be required to file their income tax and VAT records digitally. Regarding VAT records, the regulations in Making Tax Digital will not come into effect until April 2019.
VAT Records Online By April 2019
From April 2019 any business in the UK that has an annual turnover above the VAT threshold, which is presently £85,000 or over, will have to keep all their VAT records in a digital format that is compatible with the Making Tax Digital system.
The government and HMRC believe that there will be many benefits to having tax records collated in a digital format. They believe it will give them greater precision and accuracy for collecting taxes, it will make it easier for businesses to keep a track of their tax records and it will make it harder for businesses to evade paying the taxes they are due. In fact once the Making Tax Digital system is up and running for income tax they want businesses to keep a digital record of every business transaction they are involved in.
Ironing Teething Issues Out
The full Making Tax Digital system is expected to be in place by 2020, and by then it is hoped that any teething issues will have been ironed out and the system will run as smoothly as possible.
If you want advice on the Making Tax Digital system and what you will be required to do, or you need help on any other tax issue, please give us a call at our offices here in Armagh on 028 3752 2909.