Update (November 2020)
HMRC’s stated ambition is to become one of the most digitally advanced tax administrations in the world, and the programme is well underway – many farmers will now be registered for MTD-for-VAT’. It doesn’t stop here though!
The first launch of MTD saw VAT registered businesses with a taxable turnover of over £85,000 (excluding subsidy income) having to maintain their VAT records digitally, and submit their VAT return using software which is directly linked to HMRC.
The next stage is that those businesses whose taxable turnover is below £85,000 will be required to follow the MTD rules for their first VAT return starting on or after April 2022. Those larger businesses who have already done this will be able to confirm that this isn’t as daunting as it sounds, and there are several very good software options available. The best time to switch system is at your year end, so it pays to think ahead.
What will be coming after that? The first two stages involve VAT registered businesses. The plan after that is that self-employed businesses (even those who aren’t VAT registered) with business income of over £10,000 will be included from April 2023 (along with landlords with property income of over £10,000). Whilst subsidy income isn’t considered when calculating the ‘taxable turnover’ for VAT purposes, it would be considered ‘business income’, so this stage of MTD roll out will affect all farmers whose total annual business income is over £10,000.
It can be tempting to put things off until nearer the time, but be assured that (a) there can be good reasons to move across to a new system sooner rather than later e.g. to tie in with a new financial year and (b) there are some excellent digital bookkeeping systems out there which are very intuitive to use and can significantly reduce the time you spend bookkeeping, and increase your chances of getting everything right!
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