The United Kingdom’s Making Tax Digital is new in the world of business. And some may find the MTD new to their ears.
Since the corporate world is broad enough to deal with to explain the details of the UK’s new tax system, this article serves the least it can do. You can find below the most commonly used jargons concerning Making Tax Digital.
The MTD stands for the United Kingdom government’s initiative, Making Tax Digital itself. The said initiative is believed to be the key to put an end to the tax return and deliver to the UK businesses’ table a transformed and better tax system in the year 2020.
As stated by the HMRC, a non-ministerial department in the UK, MTD’s main objective is to give a more efficient, more effective, and easier service to taxpayers.
The HMRC means Her Majesty’s Revenue and Customs. This is the non-ministerial department of the UK government. The said department is assigned in collecting taxes that recompenses for the United Kingdom’s public services. They also assist families and even individuals with directed financial support.
According to the HM Revenue and Customs, they desire to bring the name of the UK’s administration in one of the most digitally progressive tax administrations in the world. And to achieve that dream, the HMRC is working with trusted and MTD-compliant accounting software developers in order to deliver a better tax system to the public.
The bridging software is one-way taxpayers can connect the stored data and information in spreadsheets with HMRC. It makes the digital submission more effective and much easier for both taxpayers and the HMRC.
The bridging software is an app or software that’s produced and provided by the accounting software developers whom the HMRC are working with. The different bridging software can contain special features and offers for taxpayers depending on the accounting software company.
This term is used for the bridging software that will link taxpayers’ digital records with the HMRC systems. The bridging software must be MTD-compliant or so to say, compatible enough to comply with the MTD rules stated by the HMRC.
Making Tax Digital for VAT
The Making Tax Digital for VAT is the first primary stage in the UK’s initiative. Starting 1st of April 2019, taxpayers and/or business that are VAT-registered with revenue exceeding the VAT threshold will be mandated to keep digital records.
Also, they are required to submit their VAT returns through bridging software that supposedly meets the requirements given by the HMRC.
To specify and simplify the word, this refers to an individual who acts on behalf of a group or another individual. In MTD’s jargon, in most circumstances, the “agents” are the accountants.
They do the submission of tax returns on the taxpayers and businesses’ part. This means that if taxpayers seek the help of an agent, then you’re their client.
If the agent is an accountant, who do you think is the client? To say it easily, the “clients” are the taxpayers and/or the businesses who acquired accounting services.
These are the group of individuals and/or businesses who contain tax records on the system of HMRC. They have different and corresponding tax duties to meet by the set deadline of submission.
Under the new tax system which is the MTD, taxpayers are required to comply with their tax duties quarterly. This means that they have four times the deadline compared to the previous or traditional tax system.
These are the basic jargons you can find on the topics concerning the UK’s new tax system, Making Tax Digital. Evidently, the UK government together with the HMRC is working hard and giving their best to reach the goals and dreams of the administration.
Today, they may find themselves on a rough road, but if they’ll keep the determination and perseverance that they’ve been showing since the beginning, there’s no doubt that the UK will soon be one of the most digitally transformed tax administrations in the whole world.
Kath Ramirez embraced the dream of being a writer since she was in 4th grade. She took it seriously and she’s now a graduate of AB Journalism and a current writer to Australian and United Kingdom-based companies. Aside from writing, Kath also keeps herself busy spending time with her family, cherishing the role of a mom to 3 dogs and a puppy, reading random books, and diving into the world of photography. She’s not even a pro to whatever she’s engaged into right now, but one thing she knows, she’s happy and that’s more than enough.