What is it?
Making tax digital is a raft of changes that will result in taxpayers providing information electronically to HM Revenue & Customs and aims eventually for all information to be on more of a real time basis. Although there are a number of changes planned these will not all be introduced at once.
The first of these changes will impact upon VAT registered businesses with a taxable turnover above the VAT threshold (currently £85,000).
When does it start?
From 1 April 2019 these businesses are mandated to keep digital VAT records and send returns using MTD-compatible software.
The deadlines for sending VAT returns and making payments are not changing.
The first applicable VAT quarter (or month if you file monthly returns) will be the quarter/month commencing on or after 1 April 2019. In practical terms this means the first monthly return will be April 2019 and the first quarterly return will be for the quarter ended 30 June 2019, 31 July 2019 or 31 August 2019 whichever is applicable to your VAT return cycle. You will therefore need to start keeping records electronically from the start of the first quarter.
What does it mean for me?
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. 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 currently 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. The summary information must not be physically re-typed into another software package.
If you are already using commercial accounting software then it is possible that the software may be MTD compatible if you have the appropriate version. For larger firms or practices using bespoke in-house software solutions if these do not incorporate MTD functionality then you will need to look to alternative measures to transfer data from your bespoke systems into MTD compatible systems.
How can Beatons assist?
The transition from the current filing arrangements for VAT purposes to Making Tax digital will be different for every business dependent upon the systems and software they currently use.
Beatons can assist in the transition process with a number of options:
- Review your current practices and systems to see whether these will be MTD compliant
- Review whether current software will be compatible and costs if appropriate for upgrades. (As accountants we can often offer cheaper software costs than purchases direct from software providers)
- Review available software options which might be appropriate to your business, whether spreadsheet bridging systems or the transition from spreadsheets to accounting software.
- Offer ongoing support with accountancy software, reviewing or submitting quarterly filing and accountancy queries.
- Offer a complete outsourcing solution which takes over your bookkeeping requirements including Making Tax Digital and frees you up to focus on your business.
Please contact us for further advice, or if you would like to receive essential business news and tax tips sign up to our monthly accountancy newsletter.