Making Tax Digital (MTD) is essentially a set of reforms relating to the way we all pay our taxes.
Many of the new tax reforms will come into play from 2020, but MTD for VAT is becoming mandatory for all businesses, charities, schools, sole traders and partnerships with a taxable turnover greater than £85,000 from April 2019.
What if you already submit your VAT return online?
After April 2019, the existing portal for submitting online VAT returns will close for anyone with a taxable turnover greater than £85,000 and you will need to submit your return figures directly from your accounting system or ‘bridging’ software.
The reason for this, is that HMRC has recognised that it loses around £4billion a year from simple VAT errors. So MTD will help reduce the number of mistakes and will collect VAT in a more efficient manner.
What if your accounting records are manual?
From April 2019 you must keep digital accounting records if you are a VAT registered business with a taxable turnover greater than £85,000. All other taxation will need to be digital by 2020 although the actual date is yet to be announced.
Do I need to use a digital accounting system?
Under the terms of MTD you will need to use what they call ‘functional compatible software’ that can do the following:
- Keep and preserve records in a digital form as outlined in the new rules
- Create a VAT return from the digital records held in your compatible software and submit directly to HMRC
- Provide HMRC with VAT data on a voluntary basis
- Receive information from HMRC to ascertain compliance
We can help you prepare for MTD
We are well versed in all the latest changes and software packages out there that will help you get on board and manage your MTD compliant accounts. We have arrangements with several of the market leading software firms which means that our clients will be able to buy a subscription at a much better rate than if you purchased it directly.
Call us today to find out how we can help you become MTD compliant.
Ask about our free taster sessions to look at online systems for your business.