HMRC’s ambition is to become one of the most digitally advanced tax administrations in the world by building an API ecosystem and has been working with over 900 developers & 3rd parties opening up the data and integrating their softwares. HMRC’s first robotic automation was deployed in 2013 and in 2016 HMRC opened its Cyber Security Command Centre. HMRC even has its own chatbot ‘Ruth’, their virtual assistant who has handled 5 million queries so far to date. So, this isn’t going to go away!
HMRC want to make the tax system easier by increased online data sharing for individuals and businesses to help them keep on top of their own tax affairs and get their taxes right and bring an end to form filling. No re-keying of data will reduce errors and tax gap. It started with self-assessment for tax returns in the 1990s, then in 2014 Real Time Information (RTI) for PAYE submissions for employees in real time, followed by automatic pension deductions from pay under Auto Enrolment for Pensions which completed in 2017. Now MTD for VAT comes in on 1 April 2019 and from 1 April 2020 at the earliest MTD for Income Tax will become mandatory.
HMRC aim by 2020, that each individual will have their own online HMRC Personal Tax Account that brings together all of the individual’s information from all online sources and that they will be able to see how much tax they need to pay, similar to the way people use online banking.
MTD for VAT CHECKLIST
1. Are you VAT registered and have a taxable turnover above £85k
2. Check you have MTD for VAT compliant software
3. Make sure your data is ready to submit under MTD
4. Check your first vat period that falls under MTD
5. In addition, you must register online separately with HMRC for MTD for VAT as the old VAT user ID will not work and manual submission through the HMRC gateway for VAT portal will no longer be accessible
MTD for INCOME TAX
This is in pilot stage by HMRC. Self employed businesses and landlords will need to update HMRC at least quarterly from 1 April 2020 at the earliest.