You may have heard lots of chatter about ‘Making Tax Digital’ (MTD). You may have also received a letter from HMRC. You may also have heard stories which are frightening.
Well relax, release that stress and read our quick guide below to realise that actually, there shouldn’t be any nasty surprises.
So what is MTD?
MTD is an initiative being brought in by HMRC to make sure the UK tax system is effective, efficient and easier for taxpayers. It will begin on 01 April 2019 with MTD for VAT and then other taxes from April 2020 at the earliest.
From 01 April 2019, VAT-registered businesses above the threshold of £85k will have to keep digital records and submit their VAT returns using compatible accounting software. Details of the compatible software can be found on the HMRC website but include well-known names including Xero, Zoho, Sage and Quick Books.
Why move to MTD?
HMRC state three key reasons to this move to Making Tax Digital:
It’s more effective: Recording of tax will be more accurate, providing fewer opportunities for errors, miscalculations and fraudulent activities. It will be processed by HMRC quickly and you can access the information HMRC have at any point so you will be able to see if there’s anything that looks inaccurate and also see what you owe.
It’s more efficient: Digitising accounts will allow for a faster, more streamlined automated process which will give you back some of your valuable time allowing you to be more productive. You won’t need to submit anything more than once!
It’s easier: By making this move online it will actually make the recording of monies and returning of tax returns much simpler.
What do I need to do now?
Talk to your accountant, they may already be operating like this so there could be no impact for you. And if they are not, a call with you can start the conversation and get the ball-rolling.
If you currently do this yourself and manually submit your VAT on the Gateway portal than start to look around at the compatible software available, the HMRC have a full list of all suppliers so I would start here.
Do I have to make these changes?
Yes, and you will get fined if you don’t do this. From April 2019, HMRC will only accept submissions made directly through the compatible accounting software, manual submissions will no longer be accepted. These rules will expand to other taxes later in 2020.
When should I make these changes?
Start as soon as you can, the sooner you can start on this the better it will be. It will give you some time to speak to your accountant and review your processes.
Most importantly, don’t panic, the change is coming so start the conversations and more than likely, you may not need to do anything at all.
If you have any questions about how can help you with your tax needs visit https://accountingandbeyond.co.uk/services/beyond-tax/ or email us at firstname.lastname@example.org.