Farming News - Farms must have a digital VAT scheme in place by April 2022
Farms must have a digital VAT scheme in place by April 2022
The government has announced that it is the right time to plan the extension of Making Tax Digital. Businesses with a taxable turnover of more than £85,000 already have to keep records digitally and submit their returns using software.
From April 2022 Making Tax Digital will apply to all VAT-registered business for their VAT obligations and from April 2023, businesses and landlords with business income over £10,000 per annum which are liable for Income Tax will need to keep digital records and use software to update HMRC quarterly through Making Tax Digital.
With Making Tax Digital for Income Tax in place, HMRC will have access to up-to-date business information no more than four months old for up to four million small businesses and landlords. This allows for better targeted policy responses and makes the tax administration system more resilient and effective in responding to future crises.
The extension of Making Tax Digital does not create any additional tax liabilities for businesses, nor will it change when tax is paid for any businesses or landlords in scope of the extension. However, the government recognises that these are important steps forward and in taking these next steps of Making Tax Digital, HMRC will engage widely with the businesses affected, and ensure that implementation plans are well designed to support the transition.
NFU President Minette Batters said:
“The government has set an ambitious timescale for the mandatory roll out of Making Tax Digital but we believe changes are needed to simplify the way in which income is reported first, given the extent to which our members have diversified and how different activities must be reported separately.
“We also believe government must deliver on its manifesto commitment to boost rural digital infrastructure so that rural businesses can first cope and then take advantage of digital reporting.
“We will continue to work with government on the design of the scheme to ensure any new system does not increase burdens on farmers, for example, by requiring multiple quarterly returns.”