Microsoft Dynamics NAV, 365 help UK firms comply with Making Tax Digital

Next year, business in the United Kingdom will be required by law to start using the Making Tax Digital for Business system. The initiative, which will roll out in phases, requires businesses to register, file and pay taxes as well as update their information using a new online tax account.

The requirements of Making Tax Digital (MTD) apply to the UK's value-added tax (VAT), an indirect tax applied at the consumption of most goods and services. The two broad requirements are:

1. Keep digital records (for VAT purposes only)
2. Provide VAT return information to HMRC through Making Tax Digital-compatible software

Per the first requirement, which will go into effect April 1, 2019 - the deadline was originally April 1, 2018 - businesses with a turnover above the VAT threshold (currently £85,000) will have to keep their records digitally. Plans are to expand the scope of MDT beyond VAT and to other business taxes, but not for at least a year after the VAT deadline. As the UK government's MDT site advises:

The government has committed that it will not widen the scope of Making Tax Digital for Business beyond VAT before the system has been shown to work well, and not before April 2020 at the earliest. This will ensure that there is time to test the system fully and for digital record keeping to become more widespread.

Importance of ‘real-time' systems

"Making Tax Digital is a UK government initiative to help streamline HMRC returns," explains Nicki Stewart, business ...