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What does Making Tax Digital (MTD) mean for businesses?

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VAT-registered businesses with a turnover above the VAT threshold (£85,000) will soon be required to maintain their business records digitally, submitting their VAT return through software that is Making Tax Digital (MTD) compliant.

Paper records and the current online form will no longer be suitable methods of providing VAT return information.

The new system is mandatory, and HMRC will be imposing penalty points and fines for non-compliance.

Accountant Tim Lwin is encouraging businesses to prepare in advance of the new system becoming live.

He said: “Even though there is a year before Making Tax Digital starts, it is vital to understand what the new system involves and what changes you may need to make to adhere to its requirements.”

Tim cautioned: “You may need to purchase MTD compatible software to submit your tax returns online and this can take time to set up and adjust to using.”

More information is available on the gov.uk website.

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