Digital tax collection comes into force for businesses

There are fears over the fact that some farmers are not well-prepared for the change
There are fears over the fact that some farmers are not well-prepared for the change

New requirements come into force today (1 April) for VAT-registered businesses with a taxable turnover of over £85,000 to file their returns online.

Making Tax Digital has been described as the biggest shake-up to the taxation system since Self-Assessment was introduced more than 20 years ago.

The new system starts with VAT and requires businesses to keep records in a digital format and file their VAT returns using functional compatible software.

Making Tax Digital will extend to Income Tax and Corporation Tax, but not before April 2020.



Making Tax Digital for VAT becomes effective for VAT registered businesses with a taxable turnover above £85,000 from 1 April 2019.

The filing position for VAT registered businesses with a taxable turnover below £85,000 will remain unchanged for the time being with the expectation that such businesses will be brought under the new requirements from April 2020 at the earliest.



In the months leading up to 1 April 2019, the government was urged to postpone its plans over fears that farmers are not well-prepared for the changes.

There are reports of farm businesses going to desperate lengths to get access to digital connections to be compliant.

The patchy digital infrastructure across many rural areas means farmers are still struggling to access stable and secure internet.

Indeed, Chartered Accountant Saffery Champness said it will force many farmers and rural businesses to perform a 'quantum leap' in switching from manual calculation to digital software.

And of the farmers and small businesses who are online, many are struggling to get to grips with the leading accredited software solutions, finding them difficult to use.

It comes as a new report by a House of Lords Committee found HMRC has 'failed to adequately support' small businesses with the introduction of Making Tax Digital.