While this may not affect you now if you are not VAT registered, this system will certainly be making its way to you within a few years and its something worth preparing for sooner rather than later.
HM Revenue and Customs (HMRC) has introduced new legislation to digitise the tax system, and the way businesses maintain their records. This legislation will eventually affect income tax, corporation tax and VAT. However, MTD for VAT is being introduced first.
The idea of the new tax regime (MTD) being introduced by the government requires businesses and individuals to register, file, pay and update their information using a new online tax account.
MTD will represent a massive change to accounting and will entirely wipe out claiming for items you don't have records for, and you will need to do a return every three months rather than once a year.
You will need to keep digital records almost real-time records, and you must have a digital copy of the receipt to match the expenses you're claiming for at the time of submission.
Going digital will abolishes the annual tax return as we know it, replacing it with a personalised digital service through which taxpayers will be able to send and receive information to HMRC at the click of a button.
The ultimate goal of HMRC here is to reduce the chance of error in all tax returns.
More updates on this to come!
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