The Government's plans for Making Tax Digital, a modernised digital tax system for the UK, have now extended to the reporting of VAT for businesses and individuals in the latest draft Finance Bill.
The concept of Making Tax Digital is to make it easier for businesses and individuals to get their tax right – avoiding underpayment and overpayment – phasing out the need for annual tax returns for millions of people.
Within the Government’s new draft Finance Bill, it has discussed a potential framework for the reporting of VAT. The draft suggests that the new reporting rules won’t be active prior to April 2019, while businesses generating less than £85,000 per annum will not be required to digitally report their VAT. In practice, this means that anyone voluntarily registered for VAT, is exempt from the Making Tax Digital rules.
Within clause 62 of the latest draft Finance Bill, it indicates amending the existing powers and creating new regulations about the administration and enforcement of digital VAT reporting for those eligible.
The Bill also states that digital VAT reporting regulations must ‘exempt taxable persons’ from needing to report VAT digitally for any month where the value of taxable supplies over the 12 months previous to the current month was below the £85,000 VAT threshold.
In addition, the new Bill recommends giving businesses and individuals a right to appeal to the Tribunal against any decisions and financial penalties imposed by Commissioners at HM Revenue & Customs (HMRC) regarding digital VAT reporting and record-keeping.
Those businesses and individuals who genuinely cannot use digital reporting tools, due to individual circumstances e.g. disabilities, location or religion will also be exempted from the new framework. HMRC will commit to offering alternative reporting measures to those affected.
Late VAT registration, and late VAT returns and payments can all result in financial penalties at present, with the prospect of interest being charged on top of the money you owe. If you’re struggling to keep on top of your VAT reporting, your local TaxAssist Accountant can act as your Agent for VAT purposes and correspond with HMRC on your behalf.
Don't sit and panic about your VAT returns or approaching the £85,000 VAT reporting threshold. Be prepared and arrange an initial VAT consultation with your nearest TaxAssist expert today by calling 0800 0523 555 or emailing us via our online enquiry form.