Farmers Given Chance to Start Using Making Tax Digital Scheme

HMRC has extended its Making Tax Digital pilot scheme to incorporate farmers who can now start resolving their VAT paperwork online via approved forms of accounting software.

By opening up the initiative to include farmers, the tax authorities have enabled agriculture businesses to join sole traders and other companies in participating in what is a major overhaul of the enterprise tax regime in the UK.

From April 2019, all businesses with annual turnover in excess of £80,000 will be required to start submitting their VAT returns electronically via software systems approved by HMRC.

However, there will be a ‘soft landing’ period of 12 months during which businesses will not be fined for non-compliance with the Making Tax Digital rules.

HMRC has been keen to encourage anyone unsure of how the system works to give it a try at the pilot stage ahead of the April introduction of the project.

The hope is that Making Tax Digital will dramatically reduce the scale of inaccuracies and issues that emerge in the context of HMRC VAT tax returns and save the Treasury billions pounds each year in the process.

A recent survey carried out by the software company Advanced suggested that only 57 per cent of VAT-registered businesses across the UK are ready to comply with the incoming rules on digitisation.

The company has said that it supports the efforts being made by HMRC to make its processes more digital but has insisted that the support so far given to businesses to help them prepare has fallen short of what’s really required.

“However, this responsibility doesn’t fall to the government alone,” said Jon Wrennall, Advanced’s chief technology officer.

“Suppliers approved by HMRC to support Making Tax Digital need to offer ongoing support too, as well as provide software that is accessible and user-friendly – otherwise businesses will continue to hold back or make errors,” he said.

It was reported recently by the accounting firm UHY Hacker Young that the scale of money taken by HMRC each year as VAT has increased by as much as 60 per cent of the past decade.

VAT now accounts for around 21 per cent of the UK’s annual tax intake and the value of that income for the government amounted to roughly £125 billion during the 2017/18 tax year.