Making tax digital update – VAT
Making Tax digital (MTD) for VAT comes into force from 1st April 2019. There are a few very limited exceptions where businesses do not have to comply with MTD, therefore VAT registered businesses need to start planning for it now.
Here are a few questions that have come out of client discussions:
What is MTD:
MTD is HMRC’s initiative for individuals and businesses to move over to digital record keeping.
Who does MTD for VAT apply to?
MTD applies to all VAT registered businesses with turnover over the VAT threshold (currently £85,000).
What are digital records?
Digital records are transaction level data that is maintained either using accounting software or apps.
Spreadsheets are allowed but will need a digital conversation tool / feed into software to be able to submit data into HMRC’s system.
Software that businesses use can be desktop or cloud, although there is no requirement to scan or retain documents electronically (paper copies will suffice).
What do VAT registered businesses need to be considering now?
When MTD applies to them, this will be the start of the first VAT quarter after 1st April 2019.
Where accounting software is used is it MTD compliant / up to date.
What software is the most appropriate for the business.
Timing of the move to the new software (VAT quarter / Financial year end).
If you need to talk through MTD and the impact it will have on your business please get in touch, we have some great solutions that can automate most of your accounting process.