What does HMRC mean by being digitally compliant?
In the spring 2015 Budget, the Making Tax Digital (MTD) initiative was first announced. This introduced the requirement for quarterly reporting to HMRC via digital records for small businesses, landlords and the self-employed over the VAT threshold (£85,000) for VAT purposes.
HMRC have however, delayed the date by which all those eligible had to be digitally compliant from April 2018 to April 2019 for VAT purposes and from April 2020, quarterly digital reporting will be required for other taxes (income and corporation tax).
HMRC’s requirements for digital compliance
In order to bring your business into line with HMRC’s requirements for digital compliance, the following are required:
- Systems and software must be in place for keeping VAT records
- Software must be linked to HMRC via an Application Programming Interface (API)
- Digital records need to be submitted at least once per quarter
- Bank transactions and other financial information needs to flow automatically into digital tax accounts
Start your year on the right foot and become digitally compliant before the MTD deadline hits.