For VAT periods beginning on or after 1st April 2019, VAT registered business with a taxable turnover above the VAT registration threshold will be required to keep records in a digital format and file their VAT returns using software. If the taxable turnover subsequently falls below the threshold the business will need to continue to follow the Making Tax Digital rules.
The Making Tax Digital rules require UK Vat registered businesses to file their VAT returns using compatible software as a first step in a long-term objective of requiring real time filing of individual transactions with HMRC. Making Tax Digital for VAT introduces new VAT recording rules and the requirement that all VAT return data is ‘digitally linked’ so that transactions can be traced from source data through to Vat return and upload to HMRC. The rules will change the way in which VAT returns are submitted but not alter the deadlines or the frequency for filing returns. HMRC have recently issued draft legislation to deal with penalties for failing to make returns, penalties for late payments and the way interest is charged and repaid.
In summary the legislation for penalties for failure to make returns introduces a new point-based penalty system. Late payment penalties for VAT will be similar to those applying for late payment of income tax or corporation tax.
The trend to making tax returns digital is now well underway. This trend is effective for VAT from 1 April 2019 and the government will not widen the Making Tax Digital to other taxes until April 2020 at the earliest. As more taxes are included in the digital regime, taxpayers will be able to see their complete tax picture through their digital account, just as they do in online banking.
HMRC are introducing many changes across all taxes. The introduction of these changes requires the farm business to maintain regular contact with the accountant and to avoid penalties.
For further information, contact Seamus on (028) 8224 1515.