What is MTD?
Making Tax Digital – or MTD – is the UK’s biggest tax shake-up in a generation. For any companies that file a VAT return, you will soon have to do it in a new format that is MTD compliant. This is in order that HMRC can move everyone to their new digital based tax system. To avoid a big deadline for everything to happen in one go, they are making the change in stages. Your annual taxable turnover will determine when you will have to make the switch.
From April 2019
If your business is VAT registered and you have (or indeed have had) a taxable turnover above the VAT threshold, you have to keep a digital record of your VAT related finances. This needs to be done in MTD compliant software. Your VAT return also has to be done through this software and not on HMRC’s site as may have been done previously.
From April 2020
If the initial launch in April 2019 goes well, the next phase will start in April 2020. This deadline is for all remaining VAT registered businesses i.e. those who are voluntarily registered for VAT.
When Do You Actually Need to Start
If your VAT turnover is £85,000 or higher, the new rules apply from the beginning of your first VAT period starting on or after April 2019.
If your VAT turnover is less than £85,000 then you do not need to comply just yet.
What are Digital records?
The following is a list of the records that need to be kept.
- Business name
- Primary business address
- VAT registration number
- The VAT scheme you’re using
You need to make sure you show details of your sales that have VAT applied, including:
- The date of the sale
- The value (excluding VAT
- The rate of VAT
Does My Business Benefit?
There are a number of benefits of the new system which will help businesses, as follows.
- Improved records
- Less errors (less manual entry
- More efficient management of the business
- Less time gathering and inputing data
Meacher-Jones are developing a number of solutions to ensure our clients are MTD compliant. We have a number of staff who are training on the various software that can be used. Additionally if you do not have any systems in place at all, we are able to advise on the best software for you.
Indeed we already have a number of clients that submit their returns online and we can quickly set you up to do this yourself. We can also manage your VAT return on your behalf if you authorise us to do so. This will give you the peace of mind that you’re compliant.