I am adding updates here on developments in the move towards Making Tax Digital (MTD)
MTD for VAT
From April 2022 all remaining VAT-registered businesses not already in MTD must move to using either 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 is 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.
After difficulties with getting a small number of clients’ MTD services set up (seemingly random glitches while the new system started) MTD has been going reasonably smoothly.
Digital income tax returns
These will begin, with quarterly updates to HMRC, from April 2024. Taxpayers who are in business or who are landlords will need to be keeping digital records.