HMRC has the technology to roll out Making Tax Digital faster, as with pre-approved invoicing in Italy and Spain, but is treading carefully, says Richard Asquith, vice president of global tax compliance at Avalara
On 1 April 2019, HMRC’s drive toward automated tax reporting, Making Tax Digital (MTD), launches for VAT. Over two million businesses are starting to worry about IT upgrades or investing in accounting software for the first time to be ready for the new automated filing rules.
But this is only the start. Countries around Europe are several years ahead on the digitisation of VAT, and give us in the UK a warning of what will be coming from 2020 onwards. HMRC will soon know more than any finance director does about their own business, and could be taking control of invoicing within a few more years to help close the £12bn VAT gap.
From 1 April 2019, all businesses above the current £85,000 VAT registration threshold will have to store their transactions and report digitally. The big headache is the latter since HMRC reckons 88% of the 2.1m VAT registered businesses still manually key in their nine VAT return box numbers. This will oblige all those businesses to start using their accounting packages’ new MTD filing functionality or invest in bridging software to digitally connect their existing spreadsheets to HRMC.
