Making Tax Digital
You may be aware of HMRC’s recent initiative Making Tax Digital, or MTD for short. MTD is HMRC’s initiative which aims to help businesses and individuals
calculate their tax liabilities and stay on top of their tax affairs by enabling:
- Better use of information
- Tax in real time
- A single financial account
- Interacting digitally with customers
This 3-5 year plan will inevitably result in the end of the annual tax declarations, as we know them.
MTD is being implemented in stages, with VAT registered businesses being the first to be affected.
This means that all VAT registered businesses with a VAT quarter beginning on or after 1 April 2019 must submit their VAT returns through MTD compliant software.
You may be wondering what MTD compliant software is. HMRC sets out the terminology ‘Functional Compatible Software’ which, put more simply, means a software program or a set of compatible software programs which can connect to HMRC’s systems via an Application Programming Interface (an API).
The software must be capable of:
- Keeping records in a digital form
- Preserving digital records in a digital form
- Creating a VAT return from the digital records held in the functional compatible software and providing HMRC with this information digitally
- Providing HMRC with VAT data on a voluntary basis
- Receiving information from HMRC via the API platform in relation to a relevant entity’s compliance.
The current online VAT return will not meet these requirements.
In fact, the changes are so fundamental that it will be necessary for all businesses to review their current record keeping systems as follows:
- Businesses who currently use accounting software, will need to ensure that their software will be MTD compliant.
- Businesses who currently maintain records using spreadsheets will need to acquire software which will allow returns and updates to be made directly
from the spreadsheets, or engage us to do the work.
- Businesses who maintain records on paper will need to change, either by providing records to us promptly after each quarter end and engaging us to
do the bookkeeping and quarterly reporting, or acquiring and using appropriate software.
As your advisers we will of course support you through these changes. Throughout October, we will contact all those affected by these changes to discuss
the next steps. We will also be circulating our MTD factsheet shortly (so please keep an eye on your inbox) and running a series of webinars and seminars
to explain more about Making Tax Digital for VAT. Our timetable of October events is as follows.
|23rd October||MTD for VAT Seminar||9am|
|24th October||MTD for VAT Webinar||12 Noon|
|25th October||MTD for VAT Seminar||2pm|
|26th October||MTD for VAT Webinar||10am|
|31st October||MTD for VAT Webinar||11am|
If you would like to register for any of the seminars or webinars, please email or contact Sarah Smith on the details below: