Making Tax Digital
What is MTD and how does it affect my business?
Way back in spring 2015, the then Chancellor of the Exchequer announced that he wanted businesses and individuals to have an online account with HMRC to declare income and tax information on a regular basis. This campaign was referred to as ‘Making Tax Digital’, or MTD.
To date, a significant amount of work has been carried out to get the services related to Making Tax Digital up and running in time for the implementation deadline. The first tax to be affected will be VAT which starts from April 2019, with other taxes due to follow in subsequent years.
What is MTD and how will it affect your business?
If your business is currently registered for VAT and its turnover is over the registration threshold of £85,000 then come April 2019 it will be required to maintain electronic accounting records and file VAT returns using compliant software. In summary, Making Tax Digital means you will have to do away with those big red cashbooks that you have been diligently and accurately compiling for the last 30 years. Instead you will move to MTD-compliant computer software, as paper records will no longer be sufficient. From April 2021 all other VAT registered businesses will be required to file returns using MTD compliant software.
Dates for Making Tax Digital VAT returns
The first Making Tax Digital VAT return that will be required to be filed by MTD software will be for periods beginning 1 April 2019 so if you are on a calendar quarter basis your first MTD return will be for the quarter ending 30 June 2019. Every business over the VAT threshold will need to have completed their first return by early October 2019 when the quarter June 2019 to August 2019 will be filed.
How can we help you with your MTD requirements?
We are familiar with traditional accounting software, such as Sage Accounts, as well as newer providers, such as Xero and QuickBooks Online. With shared access, this means that we can advise you on quicker and more efficient ways of managing your bookkeeping. The software pulls all your bank transactions directly into the system freeing up valuable time and resources, thereby giving you a head start.
We are able to offer you all the help that you may need by demonstrating the different software options available so that you make the right decision for your business and the people that work with you. We will also be able to provide you with access to additional software like Receipt Bank. Receipt Bank saves you time by automating a lot of the input process just by taking a picture of an invoice or receipt on your mobile phone or tablet. We will look to see if there is any additional software available that could help your business become more efficient. We can also provide you with additional management information for Making Tax Digital.
If you are already using software then you are more than likely already compliant with the MTD requirements and you may just be able to carry on as you do now. However, you will still need to check with your software supplier that the version you are using is compliant with Making Tax Digital guidelines. If your current software isn’t compliant then you must consider changing your accounting software. Alternatively, you can look into using bridging software for your MTD requirements. By using bridging software you will download the quarterly data from your current system into Microsoft Excel and it will create all the necessary electronic links and file your MTD return with HMRC.
Support with Making Tax Digital
When it comes to meeting your MTD requirements, there are things we can do to make your life easier. There is never any harm in looking at your current software and asking the following questions:
- If I was starting my business today would I use this software for my accounting needs?
- Are there processes that I am doing manually that could be automated or become part of my overall accounts process with additional software?
- Is the business using the accounting software to its capabilities to actually generate useful management information?
Having answered those three questions honestly, do you think you need to do something about your software?
Meeting your MTD requirements
If you’re concerned about Making Tax Digital, give your local Hartley Fowler office a call. We will be happy to sit down with you and look at your current systems and how you use them. We will give you some useful and unbiased recommendations on what you can do to maximise the use of your current system or suggest alternative options that are available.
Disclaimer: The information in this blog is correct at the time of writing and is to be used as general guidance only. Please contact your local Hartley Fowler office for specific advice on Making Tax Digital.