By Jake Daniels, Client Services Adviser
Making Tax Digital! There’s been a lot of hype about this new government initiative in recent months, but what does it actually mean for you?
Making Tax Digital (MTD) has been rolled out by HM Revenue and Customs in order to make the UK tax system more effective, efficient and easier for its users. The good news is that for the vast majority of VAT registered businesses, this is certainly the case.
You will need to ensure that you have MTD compliant software in place or bridging software to link spreadsheet records to HMRC’s Gateway in order to be able to submit VAT returns to HMRC for VAT periods commencing on or after 1st April 2019, for the majority of VAT registered businesses.
The main software providers have now released updates to ensure their systems are compliant with MTD; Sage 50Cloud, Sage Business Cloud Accounting, Xero and Quickbooks are all capable of electronically submitting VAT returns to HMRC in the required format.
All that businesses need to do when they are ready to start filing their VAT returns under MTD rather than via the existing web page, is ensure that their Government Gateway credentials are entered into their software package in order to link their accounting system to their unique HMRC login. Most software providers have details on how to do this on their respective websites. If you do not have a Government Gateway login, simply go to http://gateway.gov.uk to sign up.
Now, it is important to make our smaller-business friends aware that if you are VAT registered but are under the threshold of £85k turnover per annum, then you will not be immediately required to submit your returns digitally, and can therefore continue to submit via the normal HMRC portal. For those above the threshold, all VAT periods beginning on or after 1 April 2019 will be required to submit their returns through the new system. If your business is currently exempt from filing your VAT return online, you will continue to be treated as exempt for MTD with VAT for the foreseeable future.
If your business currently uses a software provider that is not listed above, or if you are unsure as to whether yours is MTD compliant or are in need of bridging software, please do pick up the phone and call us on 01202 717867; one of our MTD specialists will be happy to help!
Take a look at the video below provided by Xero, explaining what MTD is and how it will affect your business.