A pilot for a new online VAT service has been launched, with HMRC inviting more than half a million businesses to try the service ahead of new rules coming into force in April 2019.
From 1 April 2019, under Making Tax Digital, around one million businesses registered for VAT with a taxable turnover above £85,000 will need to keep their VAT records digitally and file their returns using Making Tax Digital-compatible software.
Making Tax Digital for VAT aims to make it easier for businesses to manage their tax and will save them, and their agents, time.
The pilot has opened for around half a million businesses whose affairs are up-to-date and straightforward. The scheme will be extended to most other business types over the coming months.
“HMRC is transforming the tax administration so that it’s more effective, more efficient and easier for taxpayers,” said Mel Stride MP, Financial Secretary to the Treasury. “More and more businesses use digital tools every day to help them operate – tax shouldn’t be different. This is a major step towards bringing VAT into the 21st century.”
HMRC has also listened to concerns and will give a small group of customers with more complex requirements a further six months to prepare. This will ensure there is sufficient time for testing the service with them in the pilot before they are required to join.
Theresa Middleton, Director for Making Tax Digital for Business, said: “Millions of people are already banking, paying bills and interacting with their suppliers and customers online. Using digital tools to help businesses manage their business income and expenses and get their tax right builds on this momentum and will also help them get more control over their finances.”
The pilot is part of HMRC’s wider Making Tax Digital plan. HMRC’s ambition is to become one of the most digitally advanced tax administrations in the world. It plans to do this by transforming tax administration so that it is:
- more effective
- more efficient
- easier for taxpayers to get their tax right.
A similar Making Tax Digital pilot scheme is also in place for Income Tax. Some businesses and agents are already keeping digital records and providing updates to HMRC as part of a live pilot to test and develop the Making Tax Digital service for Income Tax.
