Making Tax Digital - Update
Published: 16/07/2018 By Robert CoyleMaking Tax Digital (MTD) - Update
Making Tax Digital – or MTD - if you are in business then over the coming months you are going to hear lots about this because like it or not it is going to affect you and the way you run your business.
The good news is that if you get this right it will actually free you up to spend less time on non-productive form filling and more time on adding value to what you do. The bad news is you are going to have to make some changes – but we can help you!
So what is MTD?
- MTD is intended to fundamentally change the way taxpayers and HMRC operate. In particular you will need to keep records electronically and communicate with HMRC via an Application Programme Interface (API).
- MTD will start with VAT for all VAT registered businesses and traders, (other taxes will get added later).
- MTD currently requires any business which is both VAT registered and has turnover in excess of the registration threshold (currently £85,000) to be compliant for all VAT periods starting on or after 1 April 2019.
- There will be no free of charge HMRC software solution, and taxpayers will be responsible for sourcing and operating ‘Functional Compatible Software’ to meet their obligations.
- Using the likes of simple spreadsheets to keep records will no longer be enough!
For ALL businesses you are going to need to use accounting software. This must be able to:
- Keep required records in a digital format;
- Preserve those records in digital form for up to 6 years;
- Create a VAT return from the digital records;
- Keep data around sales and purchases in potentially far greater detail than currently required;
- Receive information from HMRC about the business’ compliance record via the API.
What you should be doing now:
Larger businesses with their own internal IT teams should be liaising with the head of the Finance and Tax Departments to ensure that they are aware of the coming changes and that systems are being developed to cope with these changes
Smaller businesses should contact their accounting software provider to establish what offering they have and how their package will change to meet the requirement of ‘functional compatible software’.
How we can help
- For VAT registered businesses where we already do your bookkeeping and VAT we will be writing to you separately to explain the impact of MTD on our service.
- If you maintain your own books: We can takeover – we use cloud accounting (QuickBooks) plus a range of supporting applications to efficiently and accurately process your data, or
- We can work with you to help you select, test and implement a compliant solution or otherwise advise what changes are required.
What happens next?
We will be issuing a series of updates – keep an eye out for these. Otherwise please arrange to come in and have a no obligation chat to review your options