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Making Tax Digital update - what this means for the tax return.

Since George Osborne announced the “death of the annual tax return” as Chancellor in 2015 and heralded a new era of “Making Tax Digital”, a lot has happened which has reduced its’ priority for the Government, including how this may affect tax returns. 

What is MTD?

Under MTD, HMRC aims to join up its various online systems to create one partially populated account for each taxpayer and impose new quarterly filing and ultimately, payment regimes with annual reconciliations. 

With effect from April 2019, most businesses trading over the VAT threshold are now obliged to file VAT Returns online. Businesses affected by these new obligations should ensure that they are compliant with them as a matter of urgency. 

The annual tax return lives on… for now

Currently, HMRC do not have an anticipated launch date to bring the Self-Assessment tax return into MTD. However, MTD still appears to be the current direction of travel and we continue to monitor new developments closely.

Some measures are already in place. HMRC has removed the need for certain groups of taxpayers to submit annual tax returns, replacing them with “simple assessments” based on information HMRC already holds. However, this information can often be inaccurate and, with a short window to challenge these assessments, it is vital to check these simple assessments carefully.

In the meantime, the current self-assessment system continues to apply. For those who must submit self-assessment tax returns for the year ended 5 April 2019, the deadline to do so is 31 October 2019 by post and 31 January 2020 online. Needless to say, it can never be too soon to start collecting the relevant papers to ensure that your Return is submitted on a timely basis, leaving plenty of time for you to plan towards settling your tax liability in January 2020.

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