It’s less a month now that the biggest HMRC reform to VAT in decades will take effect. April 1st is just around the corner and a lot of businesses are still unprepared and yet to sign up for the Pilot.
One of the main reasons for this reform is the ability to maintain digital records and the submission of tax returns online through HMRC accredited software as against manual imputation of data on HMRC websites. The lack of proper records and some taxpayers imputing cooked-up figures on returns on HMRC’s website instigated this.
The reform could end up being by win-win for everyone despite its criticisms by the public. Some of the concerns is that it will further add to piles of compliance already existed starting from Pension regulation, GDPR, Accounts submission Companies House and HMRC; etc especially for small and medium businesses struggling with compliance costs.
The benefit for maintaining digital records of transactions could end up saving junk of cost for businesses as less time will be spent on reviewing records in an event of HMRC investigation and could reduce the fees paid to your accountant for accounts submission due to the quality of records.
It will be a turnaround for HMRC in terms of revenue generation as the likelihood and probability of error and mistake is now reduced. Just as the earlier point raised, time spent in the event of investigation will be drastically reduced as all records will be available digitally.
Software providers could end up being the biggest winner as this reform makes compulsory all businesses to have an MTD-software complaint for record keeping. This means that the businesses caught by this reform (i.e. above the VAT normal registration threshold of £85,000 and VAT registered) will be let with no choice than to switch to software which in turn result to increase in revenue for the providers.
We as service providers are in the middle in helping bridge the gaps and helping you understand what is required to be MTD compliant. We will advise and review your existing VAT processes if you have one and provide you with necessary supports and updates with ever-changing tax regulations.