Getting Ready for Making Tax Digital
22 August 2018
Making Tax Digital (MTD) is an HMRC initiative designed to make sure the UK tax system is effective, efficient and easier for taxpayers to get their tax right.
It begins on 1 April 2019 with MTD for VAT. From that date, VAT-registered businesses above the threshold of £85,000 will have to keep digital records and submit VAT returns using compatible software.
Other components of MTD, such as Income Tax and Corporation Tax, have been placed on hold until April 2020 at the earliest.
Increasingly, businesses and Accountants see the benefits of digitisation. Millions of businesses are already banking, paying bills and interacting with their customers and suppliers online, and many are already using accounting software.
It is anticipated that the move to digital integration will eliminate many of the existing paper-based processes, allowing businesses and their accountants to devote more time and attention to maximising business opportunities, encouraging growth and fostering good financial planning.
Businesses will need to use software to keep their business records digitally. This may include dedicated record-keeping software or a combination of software packages or spreadsheets.
From April 2019, software which prepares a VAT return to send to HMRC must be MTD-compatible. This means that it can integrate with HMRC systems to send VAT returns to HMRC. From April 2020, data must be exchanged digitally between all software used by a business for VAT. The information contained with the MTD VAT return will be generated by pulling information from the digital records. This information will be the 9 boxes required for the VAT return.
In the case of spreadsheets, this means that the software must be capable of taking the relevant information from the spreadsheet electronically and sending it to HMRC.
Speak to Maria Evans at our Lurgan office today to see how you can get ready for MTD. She can also guide you through various accounting and cloud-accounting software options. If you are already using software, you should speak to your software provider to find out when it will be MTD-compatible and what you have to do.
You can read more about Making Tax Digital through HMRC's website where you will also find out information on those accounting software suppliers who have HMRC-approved and tested software.