The UK government’s move to implement MTD or Making Tax Digital is the biggest change happening in taxation today. The primary goal of this initiative is to provide a more efficient method of filing taxes – realized by a complete digitalisation of the tax system. Ideally, businesses should find the process more convenient as it also aims to do away with much of the bureaucratic steps involving mountains of paperwork and form filling. But how are these businesses faring so far since MTD’s implementation?
MTD timeline: a review
The pilot scheme’s participation is limited only to those who subscribed voluntarily. Later, around spring of 2018, the live launch started; thus, ultimately leading up to the MTD for VAT mandate starting April 1, 2019. Moving forward, HMRC aims to widen the MTD programme scope.
MTD for VAT: the first wave of filing
March 7, 2019 – time to file their taxes
Fortunately this led to no major failures.
There are over two million VAT-registered UK businesses. Going over £85,000 in VAT revenue are mandated to switch to MTD filing. But since business data tends to shift periodically, the number could increase or decrease in the coming months.
How have businesses fared since?
Apart from making the tax filing process for businesses more convenient for businesses,. Another aim of MTD is reducing VAT filing errors – which HMRC estimates at £600 million. Instrumental in meeting this goal is consolidating the entire process using one modern platform.
By the end of January 2020, HMRC stated that 10.4 million customers filed their MTD tax returns. Although this number combines both personal and business taxes, the number is still unprecedented. Hence, it provides an excellent outlook towards the public’s response towards MTD tax filing.
For many businesses, using tax filing software was also instrumental in making the transition more efficient. According to CBHC account manager, Thomas Perry on how companies have fared with MTD filing so far:
“Overall, I feel like our clients have transitioned to MTD filing quite seamlessly. For clients who were reserved at first, we have been able to provide suitable solutions that fit their business needs and have caused minimal disruption. We continue to monitor further developments with regards to the roll-out of MTD.”
In conclusion, businesses should look forward to more advances in the MTD program. By using the right software and accounting partner, businesses will indeed realise the goal of this initiative – that is easier, and error-free tax filing. – CBHC Accountants