MTD - making tax digital will come into effect April 19 when every business with a turnover over £85,000 (based on the current threshold) will have to keep their records digitally for vat purposes. It will be necessary to use compatible third part software to file a vat return and this requirement will stay in place even if you fall below the threshold after. Exemptions will be authorised by the Commissioner for businesses that are unable to file a return using electronic means due to religious beliefs, age, disability or remoteness of location.
Initially the returns will be identical to the ones filed at present and only total values will need to be supplied. However there are talks of including audit reports, essentially allowing HMRC to see a breakdown of your data. Vat inspections will be based on the information provided in the reports, a very helpful tool for HMRC.
Making tax digital is all about future proofing the tax system, making it more accessible and a lot more transparent. Good or bad? Well inevitable I would say.