Making Tax Digital – Are you Ready?
Making Tax Digital (MTD) came into force in April 2019 for the majority of VAT registered businesses with a turnover above the VAT threshold (currently £85,000).
In line with tax digitization projects of countries worldwide MTD is designed to streamline tax filing and reporting processes for businesses and individuals.
It will make information more readily available and replace the traditional paper trail with a digital one.
Phase one started this month with the implementation of MTD for VAT. Other tax reporting – for example Corporation Tax and Income Tax – will follow VAT but not before April 2020 at the earliest.
What has changed?
Under MTD for VAT, most VAT registered businesses are required to:
The rules apply for periods starting from 1 April 2019. The same 9 boxes will be submitted to HMRC but it will no longer be possible to file through HMRC online services
Who provides compatible software?
Compatible software includes FreeAgent, Xero, and QuickBooks.
HMRC has provided a list of other providers which can be found by clicking on the following link. Bridging software will be required for desktop accounting software or for records maintained on spreadsheets so choose Bridging to see the list of suppliers, some of which offer free software.
https://www.tax.service.gov.uk/making-tax-digital-software
Who has to join Making Tax Digital?
VAT registered businesses whose taxable supplies exceed the threshold (£85,000) in any 12 month period ending on or after 31 March 2019 are mandated into MTD unless they are exempted or their start date is deferred. The first return is the VAT period starting after 1 April 2019.
How and when do I need to register to join MTD for VAT and what information do I need?
We recommend that you sign up for MTD as soon as the final VAT return under the previous system has been filed. For businesses that currently pay by direct debit, you cannot sign up in the 7 days leading up to or 5 working days after their VAT Return is due.
Quarter ended 30 June 2019 – sign up from 15 May 2019
Quarter ended 31 July 2019 – sign up from 15 June 2019
Quarter ended 31 August 2019 – sign up from 15 July 2019
Sign up as follows:
If you would like our assistance in choosing software or registering for MTD then please contact us.
Making Tax Digital (MTD) came into force in April 2019 for the majority of VAT registered businesses with a turnover above the VAT threshold (currently £85,000).
In line with tax digitization projects of countries worldwide MTD is designed to streamline tax filing and reporting processes for businesses and individuals.
It will make information more readily available and replace the traditional paper trail with a digital one.
Phase one started this month with the implementation of MTD for VAT. Other tax reporting – for example Corporation Tax and Income Tax – will follow VAT but not before April 2020 at the earliest.
What has changed?
Under MTD for VAT, most VAT registered businesses are required to:
- Keep records digitally for VAT purposes (paper records will no longer meet the legal requirements)
- Use functional compatible software
- Submit VAT returns to HMRC directly through their software
- Spreadsheets can currently be used as compatible software
The rules apply for periods starting from 1 April 2019. The same 9 boxes will be submitted to HMRC but it will no longer be possible to file through HMRC online services
Who provides compatible software?
Compatible software includes FreeAgent, Xero, and QuickBooks.
HMRC has provided a list of other providers which can be found by clicking on the following link. Bridging software will be required for desktop accounting software or for records maintained on spreadsheets so choose Bridging to see the list of suppliers, some of which offer free software.
https://www.tax.service.gov.uk/making-tax-digital-software
Who has to join Making Tax Digital?
VAT registered businesses whose taxable supplies exceed the threshold (£85,000) in any 12 month period ending on or after 31 March 2019 are mandated into MTD unless they are exempted or their start date is deferred. The first return is the VAT period starting after 1 April 2019.
How and when do I need to register to join MTD for VAT and what information do I need?
We recommend that you sign up for MTD as soon as the final VAT return under the previous system has been filed. For businesses that currently pay by direct debit, you cannot sign up in the 7 days leading up to or 5 working days after their VAT Return is due.
Quarter ended 30 June 2019 – sign up from 15 May 2019
Quarter ended 31 July 2019 – sign up from 15 June 2019
Quarter ended 31 August 2019 – sign up from 15 July 2019
Sign up as follows:
- You will need your Government Gateway user ID and password and VAT registration number
- https://www.tax.service.gov.uk/vat-through-software/sign-up/have-software
If you would like our assistance in choosing software or registering for MTD then please contact us.