Making Tax Digital (MTD) – Update 4
We have been in regular contact with you 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 now available from a limited number of suppliers.
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 September 17 HMRC issued its first communication with businesses about Making Tax Digital for VAT.
The Notice contains some examples and visual aids on how your current book-keeping system may be able to link with the HMRC platform.
You should speak to your current software provider to check that the software you use will be MTD compatible in time for April 2019.
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 FREE demonstration of how cloud accounting software can help your business.
We are focussing on three major suppliers who will be MTD compatible in time for April.
These are :
Xero – www.xero.com
Quickbooks – https://quickbooks.intuit.com/uk
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, and to arrange a free demonstration, please get in touch with your usual Hawsons contact.