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UK finalizing regime for making tax digital for VAT

UK finalizing regime for making tax digital for VAT

LONDON: UK Government has said it will now engage with stakeholders on the development of guidance on the regime provided for in The Value Added Tax (Amendment) Regulations 2018, tabled in the House of Commons on February 28, 2018, to provide for the introduction of new digital tax administration obligations for value-added tax registered persons in the UK.

The reforms are part of the Government’s Making Tax Digital project. Under MTD, from April 1, 2019, businesses with a turnover above the VAT threshold (currently GBP85,000, or about USD119,500) will have to: keep their records digitally (for VAT purposes only), and provide their VAT return information to HM Revenue and Customs (HMRC) through MTD-compatible software. MTD will be available on a voluntary basis to other businesses, for both VAT and income tax.

The second draft of Finance Bill 2017, published on September 8, 2017, included legislation allowing for the introduction of Making Tax Digital for VAT. This primary legislation gave HMRC the powers to introduce regulations for the regime in December 2017, which set out the detailed requirements that businesses will have to meet – The Value Added Tax (Amendment) Regulations 2018.