Making Tax Digital

Image result for Making Tax DigitalMaking Tax Digital is a key part of the government’s plans to make it easier for individuals and businesses to get their tax right and keep on top of their affairs.

HMRC’s ambition is to become one of the most digitally advanced tax administrations in the world. Making Tax Digital is making fundamental changes to the way the tax system works – transforming tax administration so that it is:

  • more effective
  • more efficient
  • easier for taxpayers to get their tax right

VAT-registered businesses with a taxable turnover above the VAT threshold are now required to use the Making Tax Digital service to keep records digitally and use software to submit their VAT returns for VAT periods that started on or after 1 April 2019.

HMRC provides a wide range of digital services and support for businesses and the self-employed.

Charities and VAT – Energy Charges is a complicated issue, but we give a brief overview here

Charities have to pay VAT on supplies of fuel and power. However charities can claim the reduced rate where fuel and power is supplied for a qualifying use. Qualifying use means either:

  • supplied for use in a dwelling or certain other types of residential accommodation, such as a children’s home, hospice or care home for the elderly or disabled
  • supplied for use in charitable non-business activities, such as free day care for the disabled

Additionally, deliveries of certain small quantities of fuel and power are automatically treated as being for a qualifying use. For example, electricity supplied at a rate not exceeding 1000 kilowatt hours a month or a delivery of not more than 2300 litres of gas oil, will qualify for the reduced rate whatever the use of the building.

If the fuel and power is supplied partly for a qualifying use the supplier may have to apportion the supply. Charities should provide the supplier with a certificate declaring the percentage of the fuel and power that will be used for a qualifying purpose.

You can find more detailed information here