Further legislation on Income Tax and Vat, which will be included in the 2nd Finance Bill * as part of the process of ‘Making Tax Digital for Business’ (MTDfB), has been made available for comment by HM Revenue & Customs.

Heralded as “a key part of the government’s initiative to transform HM Revenue and Customs (HMRC) into a world leading, digital tax authority”, MTDfB introduces the requirement for businesses to keep digital records and provide quarterly updates, which give them a clearer view of their tax position in-year.

Businesses will not be mandated to use the MTD system until April 2019 and then only to meet their Vat obligations if their turnover is above the Vat threshold. Businesses with a turnover below the threshold will be able to use it on a voluntary basis.

HMRC will not widen the scope of MTD beyond Vat before the system has been shown to work well, and not before April 2020 at the earliest.

‘Making Tax Digital reforms affecting businesses’ links to 4 documents.

The Income Tax (Digital Requirement) Regulations – includes provisions relating to the requirement to use functional, compatible software; quarterly updates; and digital records.

The Income Tax (Digital Requirements) Notices – provides information about the obligations businesses will need to meet under the Income Tax (Digital Requirements) Regulations.

The Income and Corporation Taxes (Electronic Communications) (Amendment) Regulations – amend the 2003 regulations.

Making Tax Digital for Vat: Legislation Overview – explains the requirement from April 2019 for businesses with a turnover above the £85,000 Vat threshold to provide their return information to HMRC through functional, compatible software.

14th September 2017

* ‘Second Finance Bill of 2017 (UK)’ (CPA News, 12 September 2017).