Back in 2015, the government announced plans for a transformed tax system, Making Tax Digital. The Making Tax Digital roadmap sets out government plans to transform tax administration by 2020 to make it more efficient, effective and easier for tax payers.
Following concerns raised by businesses about the scope and timings of the Making Tax Digital project, the government announced in the summer that only businesses with a turnover above the VAT threshold (currently £85,000) would be required to use the Making Tax Digital system by April 2019, and then only to meet their VAT obligations. Businesses operating below the VAT threshold may use the new system if they wish. Business may also opt to use the system to manage their other taxes, benefitting from a streamlined digital experience.
The government has also confirmed that they will not widen the scope of Making tax Digital beyond the management of VAT until the system has been proven to work, and not before April 2020 at the earliest. This gives HMRC time to test the systems fully, and for digital record keeping to become more widespread.
These changes mean that even the smallest businesses will be able to move to keeping digital records at a pace that works for them.
We are expecting more detail in coming months about how businesses with a turnover above the VAT threshold can get involved in the VAT pilot and will share that when it is available.
There's more detail in MyPACEY about the support available to you from HMRC.