I am adding updates here on developments in the move towards Making Tax Digital (MTD)
MTD for VAT
From April 2019 VAT-registered businesses with turnover above the VAT threshold (£85,000) will have to keep digital records for VAT purposes. This means either using a full accounting software package, or keeping bookkeeping records in a spreadsheet, and using ‘bridging software’ (less expensive than accounting packages) to transmit the final information to HMRC. The final information being no more than HMRC would normally receive (the full bookkeeping records are not transmitted – although HMRC will have a right as they do now to ask to see these, invoices, bank statements etc).
Invoices and receipts may still be kept on paper if preferred.
For VAT-registered businesses trading below the £85,000 threshold, the new system is optional for the time being.
Digital income tax returns
These will not be brought in until 2021 at the earliest.