Making Tax Digital (MTD) is set to come into force in April 2019 and will apply for businesses with annual sales over the VAT threshold of £85,000.
If MTD applies to you, you’ll have to use digital tools to keep records of your income and costs. Currently you may use the free Government Gateway for entering your quarterly tax return, but this is due to close and from April 2019 you’ll need to use software to submit your VAT returns electronically.
In order to prepare your business for Making Tax Digital, you need to consider the following questions:
1) When do you need to start keeping MTD compliant records?
VAT-registered businesses with a taxable turnover above the VAT threshold are required to use the Making Tax Digital service to keep records digitally and use software to submit their VAT returns from 1 April 2019.
The exception to this is a small minority of VAT-registered businesses with more complex requirements. HMRC has made the decision to delay mandation for these businesses until 1 October 2019 to ensure there is sufficient time to test the service with them in the pilot before they are mandated to join .
NB The 6-month deferral applies to customers who fall into one of the following categories: trusts, ‘not for profit’ organisations that are not set up as a company, VAT divisions, VAT groups, those public sector entities required to provide additional information on their VAT return (Government departments, NHS Trusts), local authorities, public corporations, traders based overseas, those required to make payments on account and annual accounting scheme users. The deferral will apply to around 3.5% of mandated customers.
2) Is your software compliant with Making Tax Digital?
If you are using business software, you will need to know if it is (or will be MTD compliant). HMRC is working with a wide range of software suppliers to produce suitable software for businesses and their agents. Software suppliers can be found here.
Software provided by Minerva will be fully compliant with the new MTD requirements.
3) Should you move to a different accounting sofware?
If you are using software that won’t be compliant with Making Tax Digital, now is a good time to consider whether switching software is the best option for you.
We recommend you review what you need from your business software.
For help and advise on choosing the bext MTD solution for your business, or to discuss getting reading for Making Tax Digital pleasecontact us by email or call 01707 607100 to speak to one of the team.