On 1 April, the government’s Making Tax Digital for VAT (MTD for VAT) initiative came into effect.
Businesses which have a taxable turnover above the VAT registration threshold (currently £85,000) are now required to comply with MTD for VAT. As part of the initiative, firms must keep some records digitally, using ‘functional compatible software’. This means a ‘software program or set of compatible software programs which can connect to HMRC systems via an Application Programming Interface (API)’.
Commenting on the scheme, Mel Stride, Financial Secretary to the Treasury, said: ‘Delivering MTD for VAT is the first step toward our ambition to create one of the most digitally advanced tax authorities in the world.
‘The rules . . . will give businesses more control over their finances, allowing them to spend their time focusing on innovation, growth and the creation of jobs.’
Meanwhile, Theresa Middleton, Director of the MTD for Business programme, said: ‘Tens of thousands have joined our pilot over the last six months and have helped us to test and improve the live service, ensuring we have the right support in place to help people transition.
‘Now is the time for those businesses affected by MTD who haven’t done so already to begin preparing to switch over and start experiencing the benefits MTD has to offer. You don’t necessarily need to sign up from day one, but you do need to make sure you’re keeping your records digitally for your next VAT period which starts on or after 1 April.’