We live in a digital age where more and more of our daily activities are taking place online. This brings many benefits and efficiencies and the tax system is no different. Over the last few years we have seen the change from paper forms and records being filed with HMRC to returns being submitted online. The next evolution in this process is called Making Tax Digital or MTD for short.
HMRC’s ambition is to become one of the most digitally advanced tax administrations in the world. MTD is bringing the changes to the tax system to make that ambition a reality.
The first major step is almost upon us and that is ‘Making Tax Digital for VAT’. From 1 April 2019 nearly all VAT-registered businesses (those with a taxable turnover above £85,000) will be required to use the MTD service to keep records digitally and use software to submit their VAT returns.
You might be thinking, ‘VAT returns are already submitted electronically so what is the difference?’ Well currently only the final figures on the VAT return are submitted to HMRC, the records that are kept by the business and used to compile these totals can be in many formats, from accounting software, to a simple spreadsheet or even paper records. Under MTD business will be required to keep their records digitally, using MTD compatible software which will allow it to integrate with HMRC systems to send VAT returns.
I already file my VAT return through my accounting software so I’m ok – right?
The answer is, not necessarily. As noted above, the software must be MTD compatible to integrate with HMRC systems. If you are using a cloud based software package then it is more likely you are using an MTD compatible package but we would recommend in the first instance that you check with your software provider to find out if your software is MTD ready. If it is, then you are all set 😊.
My Software isn’t MTD compliant – what do I do!?!
Don’t panic – come and have a chat with the team at GX Accounts. We can talk you through your options and help you convert to a compatible software programme. The most important thing to do is act now so you have time to make any necessary changes before you need to file your first return under MTD.
If you’re not already using accounting software, then the introduction of MTD will mean some significant changes to your record-keeping – but don’t think of that as a bad thing. Its actually a fantastic opportunity for your business to introduce some new tools to help you effectively and more efficiently manage your finances. The GX Accounts team can help you find the right package for you and provide you the support you need every step of the way.
Its not long until MTD will be in action, the MTD rules apply from your first VAT period starting on or after 1 April 2019 so don’t wait. Make sure you are ready now. Have a chat with the team at GX, we can help you ensure you are using MTD compliant software – https://www.gxaccounts.com/contact/