Making Tax Digital (MTD) is a UK government initiative aimed at modernizing the tax system and making it more efficient. It requires businesses and individuals to use digital tools to keep track of their tax affairs and submit their tax returns electronically.
Under MTD, businesses with annual taxable turnover above the VAT threshold (currently £85,000) are required to use MTD-compatible software to keep their VAT records and submit their VAT returns. Self-employed individuals and landlords with annual gross income above £10,000 will also be required to use MTD-compatible software to submit their self-assessment tax returns.
The main goals of MTD are to reduce errors in tax returns, make it easier for businesses and individuals to keep track of their tax affairs, and improve the accuracy and efficiency of the tax system.
MTD has been phased in gradually since its introduction in April 2019, and it is expected to become mandatory for all businesses and individuals in the near future. Accountants can help businesses and individuals navigate the requirements of MTD and ensure that they are in compliance with the new rules.
HM Revenue and Customs (HMRC) is the UK government department responsible for collecting taxes and administering tax laws. HMRC is responsible for collecting a range of taxes, including income tax, corporation tax, value-added tax (VAT), and national insurance contributions.
The main role of HMRC is to collect the revenues that the government needs to fund its various activities and services. This includes assessing and collecting taxes from individuals and businesses, as well as enforcing tax laws and regulations.
In addition to collecting taxes, HMRC also provides a range of services to taxpayers, including:
Issuing tax returns and other forms
Providing guidance and advice on tax matters
Administering tax credits and benefits
Processing and paying tax refunds
Resolving disputes and appealing decisions
HMRC works closely with other government departments and agencies to ensure that the UK’s tax system is fair, efficient, and effective. Accountants and other financial professionals can also play a role in helping individuals and businesses comply with tax laws and regulations.
