Making Tax Digital – Act Now!

Making Tax Digital – Act Now!

The Government’s Making Tax Digital (MTD) initiative will start with VAT for return periods beginning on/after 1 April 2019 and will apply to businesses whose taxable turnover exceeds the VAT registration threshold.

Presently, most businesses (87%) submit their VAT returns by typing their information into the H Revenue & Customs (“HMRC”) online account. Going forward HMRC wants businesses to use software to submit their return.  In addition to this, digital record keeping must replace manual records.

What Does This Mean?

If your business does not currently use software, you need to start looking at products that would suit your business.

Spreadsheets can be classified as a digital record but will need API-enabled software (Application Programming Interface) so that the VAT return can be submitted digitally to HMRC.

If you use spreadsheets, software, more than one type of software or a combination of all three, they will need to be digitally linked to each other. The data captured for the VAT return must be submitted digitally to HMRC.

What Must I Do?

Check with your software provider that the software you use will be compliant with MTD. The VAT pilot for testing software started on 3 April 2018, so make sure that your provider is participating.

Housekeeping & Training.

If software is used, make sure that entries are made correctly for VAT disclosure purposes. Consider training on VAT.

If using bespoke software, ask your programmer if registration is necessary to access tax-related APIs https://developer.service.hmrc.gov.uk/api-documentation.

When

Look at your software options now. If a change of software is needed, it is easier to manage a transition at the start of a new accounting year, rather than mid-way through a period.

If you would like to learn more about MTD please contact Karen Davies – karen.davies@kilsbywilliams.com