HMRC has been pushing to make tax digital for some time now. Claiming it will simplify the tax life for businesses and individuals, spelling the end of the annual tax return. So what is Making Tax Digital?

Making Tax Digital (MTD) is an HMRC initiative that will revolutionise the UK tax system and ultimately bring an end to the self assessment. It is claimed that by implementing MTD, it will make tax administration more efficient and effective and above all easier for the tax payer and HMRC by the end of 2020.

MTD will focus on three key areas:

• Digital record keeping – storing all your transaction in electronic form
• Digital links – have a digital link between final numbers included in a VAT return and the transactions
• Digital submissions :- carrying out all submission to HMRC using an MTD compliant software via HMRC gateway   
•            

MTD will affect all sorts of taxpayers requiring them to keep digital records in MTD compliant software (not a spreadsheet)

The first tax that MTD will apply to is VAT which starts from April 2019.

How does this affect your business?

If you run a VAT registered business, and your turnover is over £85,000 per year, HMRC will require you to submit your VAT returns using MTD compliant software for quarters that start after 1^st April 2019.

Your business will also need to keep the following records for their VAT Returns after 1st April in digital form:

Date – transaction date

VAT rate

VAT paid

Value of each transaction ( you don’t need to keep the invoice in digital form)

Your business will also need to have MTD compliant software, this software should be able to communicate (transfer data) to and fro HMRC using Application Program interface (API), in simple terms“bridging software”. At the moment spreadsheets do not meet these requirement, add-ons may be available to make spreadsheet complaint.

As Part of your preparation for Making Tax Digital you can speak to your accountant /tax advisers or contact your accounting software and ask them when their software will be MTD compliant – normally they will tell you when they will roll out and upgrade as HMRC will not provide free software support.

This is a good opportunity for business owners who still use spreadsheet to keep their records to start thinking of ways to digitalise their business, contact us NOW to sign up for QuickBooks online or XERO.  We will do all the conversion from excel to Quickbooks or Xero at a great discount.

 We will continue to submit your VAT return on your behalf as long as your provide the information in a digital format. We will advice you on this later.

Some business can be exempted from MTD under business owners disability grounds, certain religious grounds ( if your religion prohibits you from using computer ) or lack of access to the internet. 

MTD to not apply to VAT registered business with turnover below £85,000. These businesses can carry out submitting their VAT returns as usual.



For more information send us a Facebook message, call us on 02071172902 or visit www.fwco.co.uk