- Making Tax Digital is a UK government initiative to modernize tax systems and enhance compliance
- It includes digital tax reporting for VAT, income tax, and corporation tax for various taxpayer groups
- Making Tax Digital for VAT aims to digitalize VAT records and eliminate manual errors in tax returns
- Businesses must maintain digital records and use software that integrates with HMRC’s API for VAT returns
- As of April 2022, Making Tax Digital for VAT is mandatory for all VAT-registered businesses with limited exemptions
- Exemptions include businesses in insolvency, individuals unable to use digital tools, and members of certain religious societies
- Non-compliance with Making Tax Digital can lead to significant penalties
- Businesses can use full accounting software or bridging software for VAT compliance
- Bridging software connects Excel spreadsheets to HMRC’s API, suitable for businesses using Excel for record-keeping
- Excel is compatible with Making Tax Digital when used with bridging software to maintain the digital link
- HMRC does not provide free software for Making Tax Digital; businesses must use third-party compliant software
Source: fonoa.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
