A last minute rush for professional advice could lead to a number of self-employed workers potentially missing the deadline for filing their first digital VAT return, according to tax specialist Will Sweeney.
Due to this spike in demand for advice about Making Tax Digital from self-employed workers, who are required to file their first digital Vat returns by the 7th August 2019, is putting the pressure on accountants.
What is MTD?
Making Tax Digital (MTD) is part of the government’s initiative to aid individuals and businesses to improve their financial planning and assist in the management of their businesses.
During the process of preparing their Vat returns, self-employed workers will be required to sign up to HMRC’s MTD service and make their submission online for the first time. For those individuals that file quarterly and whose VAT quarter ended on or after the 30th June 2019, their first digital return will be due on 7th August 2019.
Should self-employed individuals have a taxable income above the Vat threshold of £85,000 then they are required to join MTD, however, those below this threshold are not required to join they can do so voluntarily.
David Truman, private client tax partner
“Now is the time for self-employed workers to sign up to MTD and familiarise themselves with any new systems. Advance preparation is key to ensuring that individuals don’t fall foul of the new rules. Anyone failing to make VAT payments online and on-time could face penalties for the underpayment of VAT.”
For some time now, HMRC has been angling toward changing the tax return process – the process of going digital plans to improve accuracy and ultimately cut the amount of tax lost as a result of errors, those that are both deliberate and accidental.
“Whilst every business is different, for self-employed workers, having a dedicated MTD ready accounting system or spreadsheet with ‘bridging’ software to HMRC can ensure that all information is up-to-date and immediately available.
Even in the digital age, payments aren’t always instantaneous so leaving a buffer can help avoid any costly mistakes. When paying by direct debit, individuals should register by 29 July (seven working days before a return is due). Alternatively, for those not paying by direct debit, individuals can register at least 72 hours before their return is due.
“The government’s movement to a fully-digital system is inevitable, so self-employed workers need to act fast to get measures in place. If individuals need further guidance on online filing, seeking the assistance of an accountant, tax adviser or book-keeper can help to keep tax on track.”