According to Napoleon Hill, desire is the starting line of all accomplishment, not a hope, not a wish, but a penetrating desire that transcends everything. The stated quotation by Hill best describes the storyline of the implementation of the Making Tax Digital for VAT.
The government of the United Kingdom together with its non-ministerial department namely, Her Majesty’s Revenue and Customs (HMRC) started with an extensive desire and vision to put an end to the tax return and deliver a more progressive tax system by the year 2024.
The simple desire and vision rooted in an initiative that’s now currently operating in the UK, the Making Tax Digital. The so-called “UK government initiative” set foot on the taxation industry on the first day of April 2024 as the UK’s new and digitised tax system.
The Making Tax Digital for VAT serves as the HMRC’s instrument to offer taxpayers a more effective, more efficient, and easier tax system. The UK government and the HMRC also envision the Making Tax Digital for VAT as their key to be included in one of the most advanced tax administrations in the whole world.
However, it can’t be denied that the planning and the official implementation of the Making Tax Digital for VAT is still a brainteaser to others. With that, this informative read unfolds some of the details about the new tax system through the following pages.
Who is/are the mastermind to the initiative?
The brains behind the initiative are the UK government and its non-ministerial department, Her Majesty’s Revenue and Customs or commonly known as the HMRC. The UK government desires to give taxpayers an upgraded or an innovated version of the tax system – a better and simpler service.
The HMRC is the department which is accountable for the collection of taxes, management of other regulatory regimes together with the national minimum wage, and payment of several forms of state support. It holds a big role in the successful implementation of the Making Tax Digital since it has been assisting the UK government with all its best and hard work.
Spring 2015 Budget: The Announcement about the UK Government Initiative Released
The initial announcement regarding the tendency of the tax system’s digitisation took place during the Spring 2015 Budget. Moreover, included in the announcement is that there will be a frequent amending of compliance of data, and formulating a better practice of third-party information.
This unveils the plan of the UK government to end the tax return, which is considerably a long-running tax system in the United Kingdom. However, putting an end to tax return now gave way to a new and believed to be a better system not only for taxpayers but as well as to the tax administration.
January to June 2017: The Demonstration of Tax Liabilities
Marking from the month of January to the month of June year 2017, the digital accounts present to taxpayers a summary of their tax liabilities in one place. This is somehow to begin introducing the new system which will then be in a digital format.
April 1, 2024: MTD’s First Phase
The notable and official digitisation of the UK’s tax system took place on the 1st of April, 2024. However, this is merely the first phase of the Making Tax Digital system.
The first phase of implementation states that all VAT-registered businesses with revenue above the VAT registration threshold of £85,000 will be required to submit their VAT returns in digital format. Moreover, starting April 1, 2024, the submission or compliance of tax obligations will be on a quarterly basis.
However, the first phase of the Making Tax Digital for VAT’s implementation is non-compulsory for VAT-registered businesses or companies having revenue below the currently declared VAT threshold.
April 2024: MTD’s Second Phase and Full Scope of Operation
The full scope of HMRC services concerning Making Tax Digital for VAT will then be available by the year 2024. The second phase of the Making Tax Digital for VAT will affect most of the VAT-registered businesses, self-employed people, and landlords with revenue above the VAT registration threshold amounting £85,000 will be required for the quarterly submission basis for income tax and corporate tax.
Conclusion:
As the Making Tax Digital embarks its journey as the UK’s new tax system, several questions and/or misconceptions will continuously rise. However, the Making Tax Digital for VAT will also innovate and/or upgrade from time to time in order to deliver a better and compelling service to taxpayers.
Kath Ramirez embraced the dream of being a writer since she was in 4th grade. She took it seriously and she now writes for Insurance Adviser New Zealand, one of the top financial and insurance companies in NZ. Kath also keeps herself busy spending time with her family, cherishing the role of a mom to 3 dogs and a puppy, reading random books, and diving into the world of photography. She’s not even a pro to whatever she’s engaged into right now, but one thing she knows, she’s happy and that’s more than enough.