Making Tax Digital (MTD)
HMRC have set out their intentions to become one of the most advanced tax authorities in the world by enhancing the customer experience whilst also closing the tax gap. They aim to do this through the Making Tax Digital initiative, which will transform how HMRC deal with their customers.
To make things a little clearer, below you'll find a little more info and the answers to some of the top questions that have been on our clients minds.
As ever, if you have any queries please don't hesitate to get in touch.
WHO DOES IT AFFECT?
Making Tax Digital (MTD) covers both individuals and businesses across a number of taxes. For businesses over the VAT registration threshold, VAT is the first tax selected for digitalisation in the UK. This will take effect from 1 April 2019 for most businesses.
For Income Tax and Corporate Tax, MTD will not be mandated until April 2020 at the earliest.
WHAT DOES IT MEAN FOR VAT REGISTERED BUSINESSES?
Although this does not mean businesses will have to store each invoice and receipt digitally, the transaction data will need to be stored digitally. This includes an AP and AR transactional listing and a digital VAT account from which the VAT return is prepared.
VAT returns must have digital links to digital records – spreadsheets can remain, but they will need ‘digital links’ to source systems. HMRC has announced a soft landing period of 12 months, however digital links will be mandatory from April 2020.
At present, most businesses submit their VAT returns through manually re-keying into HMRC’s online portal. This will no longer be permitted once Making Tax Digital comes into force and instead, VAT return submissions must be done digitally via HMRC’s Making Tax Digital API.
Digital submission of VAT returns will be required for most businesses for periods starting on or after 1 April 2019.
HOW WE CAN HELP
We think that although this undoubtedly could initially be a major change to your operating procedures, it should be seen as an opportunity to introduce new cloud based systems into your business which will not only track and submit your VAT Returns, but will also allow you to produce real time financial information including Profit and Loss Account, Balance Sheet and Cash Flow Forecasts.
We are certified Xero users and can seamlessly introduce the software into your business and allow you to reap the benefits of a full Real Time online Accounting Package. There are over 700 add on partners which will allow us to bespoke the package specifically to your business. From CRM, Job Tracking, Stock Control and Time and Job Management, Xero has it all.
We are experts in the use of Xero and Platinum Partners, the highest level for any Xero user.
We are able to transfer your old data for the past two years from Sage or Quickbooks, straight into Xero at no cost!!
Grasp this opportunity and let us help you take your business to the next level.