The Government has announced its latest plans for HMRC’s Making Tax Digital campaign which will require all farms and rural businesses, regardless of their turnover, to comply by 2022.
Making Tax Digital is part of an ongoing plan by the Treasury to digitise and modernise the UK tax system.
It has, since April 2019, required all VAT-registered firms with a turnover above the £85,000 threshold to keep digital records and file their quarterly VAT returns using HMRC-compliant software.
However, from April 2022 the new regime will apply to all VAT-registered business for their VAT obligations, regardless of their turnover, with plans to extend it to other areas of taxation in future.
This will be followed in April 2023 by new obligations for individuals and firms with incomes over £10,000 per annum, which are liable for Income Tax, to keep digital records and report their affairs digitally to HMRC.
The Government has also confirmed that it will consult later this year on how the system will account for Corporation Tax for businesses as well.
Responding to the rollout, the NFU said changes need to be made to simplify the way in which income was reported because many farmers have diversified and have different income streams via other businesses.
NFU president, Minette Batters, said: “We also believe the Government must deliver on its manifesto commitment to boost rural digital infrastructure so that rural businesses can first cope and then take advantage of digital reporting.
“We will continue to work with the Government on the design of the scheme to ensure any new system does not increase burdens on farmers, for example, by requiring multiple quarterly returns.”