Making Tax Digital – September Update

We have been producing regular updates to highlight that HMRC will begin phasing in its Making Tax Digital (MTD) regime from April 2019.

Initially this will only be for VAT purposes, with the wider roll out of MTD having been delayed.

However, with time between now and April 2019 passing quickly, it is important to ready your business for these changes now.

Key points – A reminder

From 1 April 2019, all VAT registered businesses with a turnover above the VAT threshold (currently £85,000) will be required to:

  • keep digital records for VAT purposes, and
  • provide their VAT return information to HMRC using MTD ‘functional compatible software’.

The recording of supplies made and received must be digital.  HMRC will not be offering software to do this and you will instead be required to use third-party commercial software.

The use of spreadsheets will be allowed, but they will need to be combined with third-party bridging software to convert this information into a format that is compatible with HMRC’s API (“Application Programme Interfaces”) platform.  This bridging software is not yet available.

You should review how you currently collect the information to prepare your VAT Returns.  If all or part of your records are kept on paper you will need to consider how best to digitise your records.  You may wish to consider doing this from the start of the next accounting period to avoid changing systems part way through an accounting year.

What’s new this month?

Under the new MTD rules, businesses will have to use ‘functional compatible software’ to provide their VAT return information.  This is third party software which can connect to HMRC systems via API – effectively a door to the HMRC system through which third-party software can push data.

On 13 July HMRC released the latest list of compatible third-party software products which included popular applications such as Sage, Quickbooks, and Xero.

This list will be updated further as time progresses.

You should speak to your current software provider to check that the software you use will be MTD compatible in time for April 2019.

HMRC have also issued a VAT Notice (700/22) which gives a lot of helpful information on the subject. In particular there is guidance on what comprises “Digital Records” and “Functional Compatible Software”. There are also some examples and visual aids on how your current book-keeping system may be able to link with the HMRC platform.

You can download a copy of the VAT Notice here www.gov.uk/goverment/publications/vat-notice-70022-making-tax-digital-for-vat-notice-70022-making-tax-digital-for-vat.

Hawsons MTD Workshops

In order to help you with the transition to Making Tax Digital, we are running regular Workshops in the run-up to April.

To book your place on these workshops visit www.hawsons.co.uk/making-tax-digital-hub/

Further Help

There is a time of great change ahead and, as always, we are on hand to help with the challenges.

We can assist you with your choice of software, help you to set this up, and offer training for you and your staff.  Alternatively, we can deal with the VAT submissions on your behalf using MTD compatible software.

You may wish to consider utilising cloud-based accounting software.  At Hawsons we are experienced in the use of these packages and would be happy to give you a demonstration of how cloud accounting software can help your business.

We would be happy to help you with any issues arising from MTD for VAT.  For further advice and information on how your business can prepare for the changes, please get in touch with your usual Hawsons contact.

Sign-Up to our Free MTD Workshop

Our offices

Pegasus House, 463a Glossop Road, Sheffield, S10 2QD

5 Sidings Court, White Rose Way, Doncaster, DN4 5NU

Jubilee House, 32 Duncan Close, Moulton Park, Northampton, NN3 6WL

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0114 266 7141

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01302 367 262

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01604 645 600

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